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“Scoring” – for better outcomes & robust compliance

“Scoring” – for better outcomes & robust compliance

Any meaningful due diligence exercise means looking at – and assessing – a lot of information, not to mention evidencing that assessment (in case the FCA or your PI insurers ever ask). Scoring each provider’s responses is a good way of keeping track of and evidencing the process, and also allows easy sharing of your views with your colleagues. To help make scoring even easier and more intuitive, DD|hub has added a new expectations-based scoring type for advisers to use.

Scoring can be really helpful in a number of ways:

  • It’ll help you keep track of how you’re feeling about each firm’s responses – which are good and which are not…
  • It provides a simple way of sharing your assessment with colleagues, and
  • It can help demonstrate that you’re engaging with the responses and thinking about them in line with the FCA’s expectations in TR16/1 (more on this below)

So from 4th October, we’re delighted to roll out new scoring options which are even easier to use.

What’s new?

Not every question and response merits a score (is one FCA number any better than another?), but where the question relates to something which might impact customer outcomes (eg risk management, financial crime controls or investment process), responses should be looked at and thought about.

Scoring options have been built into DD|hub from the outset and a lot of advisers have found it really helpful. Current options are to give a simple Pass/Fail score to a response, or marks out of 10 (with an optional weighting, for really important questions), though this more granular approach might sometimes make it difficult to give a mark – what makes it a six or a seven and how do you then justify the tiny difference to your peers or regulator?

So we’ve introduced a very straightforward “expectations” scoring basis to help you assess responses quickly and easily – does the response:

  • Fall below your expectations?
  • Meet your expectations? or
  • Exceed your expectations?

You can now give an expectations score with a single click, and the system will keep track and report totals to you on the Results page.

You’re in control – you can choose to use the new Expectations scoring, or to use one of the original scoring methods – simply click the Edit button in the scoring panel to choose the approach you’d like to use for each question.

Why bother?

The FCA have said a lot about how advisers should approach due diligence – especially in TR16/1, Assessing suitability: Research and due diligence of products and services. Crucially, they found:

“that a key driver of good research and due diligence was a corporate culture of challenge. The better firms had either in-built challenge in the process and/or individuals who were knowledgeable, enthusiastic and challenged the firm’s approach. Where there was no culture of challenge within the firm, the research and due diligence process showed weaknesses…”

The FCA expect to see evidence of the due diligence undertaken by firms, including evidence that firms have engaged with the responses and thought about them. Clearly, scoring can be a helpful tool for demonstrating this.

Furthermore, if you score the responses, these scores will populate an IFA Report which you can export from the Results page, which is ideal for taking to an internal governance meeting for discussion and debate, with the challenge the FCA have said that they’re looking for. Following discussion, scores can be updated on the system and a new IFA Report run, providing clear evidence of the process the firm went through.

How are scores saved?

Each provider is asked to give a response to each question on the system. If you give a score to a particular provider’s response to a particular question, that score is saved so that, if you later come back to it, it will be prepopulated for you.

This is especially useful if you are looking at different question sets. For example, you might start with one of the Quickstart question sets to focus on a particular area and give some scores. If you later run a more comprehensive question set, your Quickstart scores will automatically be carried over for you to the new, more comprehensive review.

Each provider provides their own response to each question so, if you’re looking at a question on (eg) AML with responses from five separate providers, you can score each provider’s response individually.

If the provider later changes or updates their response to the question, then the score is reset on any new reviews that you undertake after that date, so that you can look at their new response afresh.

You can also “Finalise” a review, which will keep a permanent record of the responses and the scores as at the time you save it. So this will keep the responses as they were at the time of the review, together with the scores which you gave at the time. This can be really helpful as a supplement to the IFA report, if you should ever need to go back to look at “who said what, and when?”

Conclusion

We’re on a mission to simplify due diligence for advisers and we see this new scoring option as another helpful step forwards. Please do give us your feedback – this change was originally suggested by an adviser – and let us know what else we could do to make DD|hub even more useful to you.

Chris Jones

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