Enhancing governance at the point of sale

Ben Mason

11 June 2021

File reviews have long been a method for insurance companies, insurance underwriters and insurance brokers to check that they are adhering to their compliance policies and procedures and to identify areas for improvement. Managing the consistency of the reviews, gathering central management information for reporting and tracking remediation and improvement tasks are challenges for many firms, especially those which use an intricate network of Excel worksheets and other documents to manage their file reviews.

In their 'Dear CEO' letter to the insurance industry in September 2020, the FCA reinforced their position that insurance firms need to improve their controls over sales processes:

"Our view of the General Insurance sector overall is that there are significant risks of potential harm that both the market and individual firms need to address. We have identified that the most significant risk of potential and actual harm in the portfolio is through customers buying unsuitable or poor value products. We believe that insufficient or unclear information at point of sale and inappropriate sales tactics to be the biggest contributors to this harm.”

The FCA went on to say that many of the key harms they have seen are directly linked to poor governance and controls and ineffective oversight. There are numerous ways of addressing these issues and no single remedy will offer a comprehensive solution. However, what is fundamental is a robust approach to the management of conduct risk at the point of sale. 

The industry approach to managing this risk is to carry out file reviews of sales and sales advisers and to execute remedial actions resulting from these reviews. However, this process is typically fraught with difficulties that would not be accepted in other key business areas. 

All too often, the file review is carried out by a line manager who is conflicted in their commercial and compliance responsibilities. Consistency of file reviews is difficult to achieve and Excel worksheets that are often used to manage the resulting information can become cumbersome. Experience tells us that you can end up with multiple copies of the data often being independently manipulated by different people. They are not easy to use for collaborative working and typically the number of spreadsheets that a company uses grows and grows, exacerbating the problem. It usually manifests itself with reporting which can be time consuming and complex and where firms have physically remote teams it create inefficiencies for a central team overseeing file reviews.

We developed My Compliance Centre’s FileChecker module to address these challenges. FileChecker allows regulated firms to define their own file review structures, using different question types and across multiple sections. Scores and weightings can be applied to questions and ‘auto-fail’ questions configured. 

File reviews can be allocated to named reviewers, who are reminded via e-mail. When conducting the review the system simply tracks progress and allows remedial actions to be setup and tracked. A managed quality assurance process adds an additional layer of control and comprehensive reporting facilitating the quality of management information you expect.

Our short video below explains how FileChecker works and offers a helpful insight into its functionality. Please take a look and get in touch if you would like a personal demonstration or to answer any questions you may have.

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