A file note is a record of an adviser’s conversation with a client.
Risk management is an essential element of good business practice. For authorised representatives maintaining a clear and up to date paper trail is critical to manage risk. Auditors that I come into contact with bemoan the poor quality of files notes and grieve that in many cases file note are non-existent.
What is a file note?
Files notes are used to supplement a client’s file with details of the interaction and are a critical component of demonstrating compliance during the advice process and any ongoing conduct. Good file notes can keep you out of jail.
If you are questioned by a cross-examiner, they will ask you to recall things and if you have documents that you prepared at the time of the conversation, obviously they’re going to be more credible.
What makes a good file note?
Effective file notes are characterised by four key features, namely being:
Clear: they must be able to be read and understood by a third party
Comprehensive: all critical points must be covered in sufficient depth
Current: taken during or soon after the client meeting with all aspects covered
Concise: contains all relevant information and detail
What should file notes include?
- Date of the discussion
- Who was involved
- The reason for the contact between client and the adviser
- Objectives and issues raised
- An outline of the discussion, without repetition of information captured by other tools (like a fact find)
- All decisions made or agreements reached
- Links to the fact find and any advice provided (providing background information & the client’s wishes)
- The ‘tone’ of the discussions — friendly, cautious, worried, tense, etc.
- Next steps or actions required
- All records being signed and dated.
Authorised representatives of fwgs will have access to the Portal which pre-populates relevant file notes with additional free fields to capture the points mentioned above.
It is no exaggeration to say that file notes could be the difference between the ability to continue practicing or not. File notes are less about facts which are contained in a Needs Analysis or a Statement of Advice and more about an advisers suggestions and the client’s responses. This is particularly important if a client changes their mind during a meeting. ASIC has an expectation that working papers and notes are contained in every client file and it will be very difficult to an authorised representative to protect themselves if a complaint arises and file notes are absent.
Other articles in this series:
- The Documents Part 1 – Introduction
- The Documents Part 2 – Financial Services Guide (FSG)
- The Documents Part 3 – Needs Analysis (Introduction)
- The Documents Part 4 – Needs Analysis (Safe Harbour Port 1)
- The Documents Part 5 – Needs Analysis (Safe Harbour Port 2)
- The Documents Part 6 – Needs Analysis (Safe Harbour Port 3)
- The Documents Part 7 – Needs Analysis (Conclusion)
- The Documents Part 8 – Statement of Advice (SoA)
- The Documents Part 9 – SoA (Safe Harbour Port 5)
- The Documents Part 10 – SoA (Safe Harbour Port 6)
- The Documents Part 11 – SoA (Safe Harbour Port 7)
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