TRAINING AND COMPETENCE SCHEME - Julian Harrisold.julianharris.net/jh/Julian...

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TRAINING AND COMPETENCE SCHEME

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CONTENTS 1.0 Introduction to the scheme 2.0 Definitions 3.0 Advisers 3.1. New Applicants 3.2. Trainee Advisers 3.3. Competent Advisers 3.4. Transition Arrangements 3.5. Minimum Qualification 4.0 Accompanied Visits and Role Plays 5.0 T&C Meeting 6.0 Fitness and Properness Checks Meeting 7.0 Continuing Professional Development 8.0 Key Performance Indices 8.1. File Checks 8.2. Persistency 8.3. Complaints 8.4. Range of Advice 8.5. Performance on Courses 8.6. Implementation of Learning 9.0 Supervision 10.0 Supervisors 11.0 Record Keeping 12.0 Appendices

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1. INTRODUCTION TO THE SCHEME The aim of the Scheme is to ensure that all Financial & Mortgage Advisors of Julian Harris Financial Consultants & Julian Harris Mortgages Limited, the Company, are competent to give up to date advice to Clients on regulated products. The Scheme sets out the arrangements for the training, development & supervision of Advisors. The Company’s Compliance Director is responsible for the Scheme, & to whom any questions relating to the operation of the Scheme should be directed. The Scheme will be reviewed annually or sooner if required. This will involve a review of the appropriateness & effectiveness of the Scheme. Subject to meeting the requirements of the Scheme, all Advisors will be authorised to advise on all products that the Company are allowed to advise upon, & that the Advisor is deemed competent on. The range of products which Advisors are authorised to advise on, is contained within the Compliance Manual. Note: - We do not recruit any Advisors who have not passed the relevant and appropriate industry recognised examinations. Ideally applicants should have at least 12 months industry experience although we will consider inexperienced applicants – see below. 2. DEFINITIONS Adviser A New Applicant, Trainee or Competent Adviser (Life / Pensions / Investments / Mortgages & related NILGI). CA Competent Advisor - an individual who, having met the requirements of this Scheme, is authorised by the company as an Advisor to Clients on regulated products. CeFA Certificate in Financial Advice. CPD Continuing Professional Development - an ongoing programme of training & development, designed to ensure that Advisors maintain & develop their competence & the quality of their advisory work. Client An existing or potential holder of a regulated product. FPC The Chartered Insurance Institute's Financial Planning Certificate. KPI Key Performance Indicator. MAQ / CeMAP Mortgage Advice Qualification / Certificate in Mortgage Advice & Practice.

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New Applicant An individual who has passed the FPC / MAQ / CeMAP (or equivalent) & has at least 12 months immediate, relevant experience & joins with the intention of becoming a Competent Advisor. NILGI Non-Investment Life & General Insuarnce. OCL Observation Check List. FSA Financial Services Authority. Role-play Role-play or supervised practice is a useful process for developing practical skills. It allows the Advisor to practice in a ‘safe’ environment & also helps the Advisor to focus on specific problem areas under the guidance of their supervisor. Scheme The Company Training Scheme for Advisors. Trainee Adviser An Advisor who has completed Stage 1 of the initial training & is working on Stage 2. ITC Initial Training Course. 3. ADVISORS There are three categories of advisers: - • Stage 1 – New Applicant • Stage 2 – Trainee Adviser • Competent Adviser 3.1 Stage 1 - New Applicant A prospective Financial or Mortgage Adviser who has passed the FPC / MAQ / CeMAP examinations as appropriate (or equivalent) & has at least 12 months immediate, relevant selling experience & joins with the intention of becoming a Competent Advisor. Stage 1 involves assessment of the New Applicant by testing, reviewing of references & reviewing of authenticated experience. The assessment is to determine the competence of the New Applicant &, if this is adequate, to determine the level of supervision & training required, enabling the New Applicant to move on to Trainee Adviser & thereafter achieve Competent Adviser status. See Appendix A – Recruitment & Referencing Procedures Where an applicant does not have the minimum 12 months selling experience their application will be referred to the Compliance Director. Their application will then be reviewed and may be considered by exception. However it is subject to a number of additional stipulations and requirements including a full business plan presentation, additional knowledge validation exercises and “buddying” them up with an experienced adviser. Inexperienced applicants are only considered by exception.

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3.1.1 Training & Supervision of New Applicants / Stage 1 During this process, details of previous experience & the range of products on which the New Applicant has applied authorised to give advice, together with previous T&C & CPD activity, will be obtained & verified, & an assessment made of the New Applicant’s training requirements. Copies of the documentation obtained will be kept in the document management system of the Adviser Information Database (AID). Any Adviser advising on Pensions and Investment must be registered with the FSA as a CF30 before carrying out any Regulated Activity. Stage 1 training starts with the Initial Training Course (ITC) consisting of three parts: - • Induction to JHFC/JHM Ltd • In House Test o General (company information and procedures) o Money Laundering o FSA Regulations • Agreed training needs See Appendix B – Stage 1 Training Agenda 3.1.1.1 Induction to JHFC/JHM LTD The New Applicant will be instructed in the areas listed in the Stage One Training process (Test A). 3.1.1.2 Formal assessment in the following areas New Applicants will sit an appropriate Independent Status Questionnaire (In House Test) - Test 1 (General Questions), Test 2 (Money Laundering Test) and Test 3 (FSA Regulations). The overall pass mark is 35 and above. If a New Applicant fails a test during Stage 1 then they will have one opportunity to re-sit the test. Failure in the second test will result in discussions between the New Applicant, their T&C Superviser & the Compliance Director, to determine whether or not the individual is suitable for engagement in a role that is intended to lead to CA status. In these discussions full consideration will be given to any mitigating circumstances surrounding the failure(s). The Stage 1 Training Form will also contain a bespoke training action plan for the New Applicant (ongoing training into Stage 2). 3.1.1.3 Agreed Training An assessment of the Advisor's current & future training needs will be made, this will be based on their current knowledge & experience.

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3.1.2 Initial Role Play Assessments An integral part of Stage 1 is the completion of a full role play assessment. A full role play assessment includes a factfind and a presentation appointment. All New Applicants must demonstrate competence in the role-play assessment to be able to pass stage 1. Full details of the initial role plays must be recorded in the AID system. Stand alone sales assessment forms are available from the Head of Compliance & Risk. 3.1.3 Duration & completion of Stage 1 When the New Applicant has successfully completed Stage 1, the Advisor will be awarded a ‘Certificate of Stage 1 Training’ & then Stage 2 commences. A record of the permitted areas of business will be agreed & recorded in the Adviser Information Database (AID) as will a Stage 1 sign off certificate. If, as a result of an outstanding requirement in the recruitment process, sign off from Stage 1 exceeds 6 months, then the New Applicant will need to be re-assessed. The re-assessment will require the individual to retake all the tests & assessments in the ITC & pass them at the first attempt. Stage 2 - Trainee Advisor A Trainee Advisor is an Advisor who has completed Stage 1 of the initial training & is working towards Competent Adviser status. Stage 2 involves participation in the full range of activities set out in the CA’s job description, under direct supervision. This practical, on-the-job development continues the process begun in Stage 1. Progress will be monitored by assessment & encouraged through the training programme. Progress towards Competency will be recorded on the AID’s Training & Competency (T & C) process which will be completed throughout Stage 2 training & is designed to document the Trainee Advisor's accompanied visits or Role-plays, T&C Meetings file checks & KPI results during this time. From this the T&C superviser can monitor the progress of the Trainee Advisor & decide when they can be deemed competent. During Stage 2 their first 10 cases must be checked by the File Quality Department (FQD) prior to the adviser being assessed for reduced checking levels and detailed feedback returned. In addition the Trainee Adviser's T&C Superviser will monitor and approve all their activities via KPIs and the AID system. 3.2.1.1 T&C Meeting Formal assessment will be made at the T&C Meeting, which will take place once every 6 months. Assessment will be based on the any accompanied visits or Role-plays, file checks & KPI results. All areas of business will be discussed, & comments recorded in the T & C Meeting Report. The quality of advice will be closely examined. The Advisor will be questioned on the range

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of their advice, & comments recorded by the Supervisor as to which products were discounted & why. In Stage 1 and 2 combined, a minimum of 2 satisfactory complete advice cycles, in either a live environment or a role play, must be completed in the first six months, thus allowing the supervisor to adequately assess the trainee's performance. All Trainee Advisors will undergo periodic tests on various subjects as appropriate. See Appendix C – T&C Meeting 1-1 Agenda 3.2.1.2 Training Continuing from Stage 1, the training program will be revised to enable the Trainee Advisor to acquire all the skills, knowledge & understanding of the CA's role, which are needed before they can be formally classified as a Competent Advisor. Training will be based on KPI information obtained, Role-plays, accompanied visits (where appropriate), file checks & CPD records. Training will be devised between the Advisor & their supervisor & reviewed at the T&C Meetings. The training will be documented on an ongoing basis in the T&C Meeting Report, Actions & Training Needs section. Continuing training will be given, where required, in respect of the in-house product / provider selection systems & the Suitability Letter system. Role-play can be used to formally assess an activity following the drawing up of an Action Plan. 3.2.1.3 Continuing Professional Development Trainee Advisors must commence & continue a programme of Continuing Professional Development to ensure they maintain & develop their competence & the quality of their advisory work. With CPD the emphasis should be on quality and not quantity. 3.2.3 Duration & Completion Of Stage 2 The duration of Stage 2 will be determined by the Advisors previous experience & their ability to demonstrate the required progress, & is intended to take less than six months. If Stage 2 takes longer than six months the Trainee Advisors suitability will be re-assessed by their T&C Superviser. The maximum time allowed for successful completion of Stage 2 is one year from the start of the Initial Training Course. If this is not achieved then, only in exceptional circumstances, an extension may be allowed. On successful completion of Stage 2 all of the relevant records, i.e. diary, and all supporting documentation in the Adviser Information Database (AID) checked & verified by the Training & Competence Officer. The Supervisor will complete a Certificate of Competency, detailing how, why & in what areas the Advisor has been deemed competent.

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3.3 Competent Advisor A Competent Advisor is an Advisor, who (where necessary) is registered by us with the FSA & having met the requirements of this Scheme, is authorised by the company as an advisor to Clients on some or all regulated products. 3.3.1 Assessment Formal assessment will be made at the T&C Meeting, which will take place once every 6 months All Competent Advisors will be assessed by reference to File Checks, CPD records & Key Performance Indicators & have their application skills assessed during accompanied visits or Role-plays. The precise number of accompanied visits or Role-plays for each CA will depend upon their individual experience & judgement of the supervisor, as to what is needed. However, supervisors will accompany every CA for the purpose of observing a client interview or conduct a Role-play, at least once a year. All Competent Advisors will undergo periodic tests on various subjects as appropriate. 3.3.2 Training Training will continue based on KPI information obtained, Role-plays, accompanied visits, file checks & CPD records. Every CA is encouraged to attend the quarterly training meetings arranged by the company. 3.3.3 Continuing Professional Development (CPD) CA’s must continue a programme of Continuing Professional Development, agreed with the firm, to ensure they maintain & develop their competence & quality of their advisory work. With CPD the emphasis should be on quality and not quantity. 3.4 Transition Arrangements for Existing Advisors under previous arrangements Representatives of the Company who achieved threshold level competence under the Company's previous arrangements were automatically classified as CAs on 1st October 1995, although we have subsequently re-assessed all current Advisors & re-classified their areas of competency. Advisors undergoing on-job training at that date were classed as Trainee Advisors & continued training under direct supervision within Stage 2 of the Scheme. 3.5 Minimum Qualifications The minimum qualification for Advisors transacting Pensions & Investment Business is the FPC or CeFA qualifications. For Mortgage / NILGI Advisors it is MAQ or CeMAP. Encouragement should be given to Mortgage / NILGI Advisors to obtain an appropriate General Insurance qualification, e.g. The Institute of Financial Services’ Certificate of Regulated Insurance – CeRGI.

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4.0 ACCOMPANIED VISITS & ROLE-PLAYS Accompanied visits & Role Plays enable the supervisor to assess the Advisors skills at conducting client interviews, & ensure all required areas are adequately covered. Role-play, or supervised practice, is a useful process for developing practical skills. It allows the Advisor to practice in a ‘safe’ environment & also helps the Advisor to focus on specific problem areas under the guidance of their supervisor. See Appendix E Frequency: Stage 1 – New Applicant: 1 role play at Induction Stage 2 – Adviser Trainee: 1 role play at first T&C Meeting and prior to sign off Competent Adviser: yearly 5.0 T&C MEETINGS The purpose of these meetings will be to review the CPD programme, give feedback, discuss KPIs, training needs, concerns of adviser / T&C Superviser; review training completed. The T&C Meeting Report provides the basis for the meeting. See Appendix C – T & C Meeting 1-1 Agenda Frequency: Stage 1 – New Applicant: at Induction Stage 2 – All Advisers: every 6 months 6.0 FITNESS AND PROPERNESS CHECKS Although these annual checks are primarily a compliance function, training & competence issues may be identified during these checks & fed into the T&C Meeting for action. Frequency: Yearly See Appendix D – Fitness & Propriety Agenda 7.0 CONTINUOUS PROFESSIONAL DEVELOPMENT PROGRAMME Continuing Professional Development is an ongoing programme of training & development designed to ensure that Advisors maintain & develop their competence & the quality of their advisory work, & that it integrates with the Assessment & Training described above. CPD involves the refreshment & development of skills, updating existing knowledge, extending the range of products on which the CA is authorised to advice & training on any new or updated products & changes in legislation. It is an ongoing process that is successful when the implementation of an agreed programme resolves an identified need & results in the learning being transferred to the advice process to enhance performance.

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7.1 Identifying Training & Development Needs The key to an effective CPD programme lies in the ability to identify a Competent Advisors individual training & development needs. Whilst the CA will remain accountable for his own activity, the responsibility for identifying these needs will be shared with the supervisor, & the appropriate solutions must be agreed between them at the T&C Meeting. 7.1.1 General Needs General needs may arise out of: 1 Changes in regulatory & legislative requirements; 2 Changes in administrative procedures; 3 The introduction of new types of products; 4 Existing product updates or alterations; 5 Changes in our market position. 7.1.2 Individual Needs Individual CA's needs may include: 1 Developing & improving technical skills; 2 Authorisation to give advice on additional products; 3 Studying for additional approved qualifications e.g. AFPC. The above areas need to be the subject of discussion between the CA & their Supervisor. Supervisors must routinely record in the Adviser Information Database (AID) their T&C meeting and CPD log, the fact that these areas have been discussed & understood. Misunderstanding of any general changes would need to be recorded & actioned in the same way as any remedial development training is recorded, i.e. through T&C Meeting Report, CPD Log & Action Plans. As the supervisor & the CA will share the responsibility for the CPD programme, the supervisor should agree that the programme is both appropriate to the CA's needs & of a standard calculated to at least maintain &, preferably, enhance his competence. Once any CPD activity has been completed, the supervisor must validate the appropriateness & standards of CPD activity as having met the CA's needs. This should be done by continuous monitoring of KPI standards, direct observation & assessment of job performance & one-to-one / team meetings. If any CPD activity falls below the agreed standards, the supervisor must ascertain the underlying cause & introduce the appropriate remedial action. Although the time spent on CPD is important, the primary focus for CPD should be on quality as opposed to quantity. The acquisition of CPD hours is not the object of the exercise; the whole process should be one that assists the CA to attain more knowledge, acquire improved skills & possibly aid his entry into new areas of business activity. 7.2 CPD Mix

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When considering a programme of CPD it is important that time is spent on different activities. For example, it would not be acceptable for a CA to think that CPD requirements have been met as a result of only reading trade publications. The supervisor responsible for reviewing the CPD Log will need to ensure that a realistic balance is achieved. Individual CA’s will have varying CPD needs. The number of hours spent by one CA on CPD could be quite different to another. The following mix illustrates how much time could be allocated to each area to maintain an acceptable balance of activity as a percentage of total time spent on CPD: 1 Formal Courses 30% 2 Attendance at Conferences 10% 3 Individual Development 30% 4 Specific reading / studying 30% 7.3 Formal Courses When formal courses are considered, the supervisor will ensure that any courses being provided to the Advisors are appropriate to their development. In situations where CA’s are funding their own professional development through an external course, or the training is from a product provider, it is still important that the same process applies in terms of debriefing & recording, as if the CA had undergone internal training. The T&C Superviser will maintain a training record detailing the providers & the level of training resources they can provide. The T&C Superviser will also ensure that quarterly training meetings will offer a full & varied programme. 8.0 KEY PERFORMANCE INDICATORS Key Performance Indicators are identified aspects of the advice process, against which the Advisors performance can be compared. They are detailed as follows. 8.1 File Checks- Office based checking of new business client files will be conducted soon after submission, assessing Advisors skills & compliance in terms of fact-finding, advice given, suitability letters & other required documentation. SUITABLE The file is satisfactory and the suitability of the advice is clear and complete. The advice is sound and there are no material deficiencies in the file in respect of quality of advice or compliance with Financial Services Authority or Julian Harris’ own requirements. UNCLEAR It is unclear from the file whether or not “Best Advice” has been demonstrated. Some material deficiencies exist in the file, which need to be corrected if the appropriateness of the advice is to be proven. Once remedial work has been undertaken the file will be

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reassessed to confirm suitability. If it is deemed to be unsuitable then the following will apply. UNSUITABLE The evidence suggests that the advice is inappropriate or non-compliant and “Best Advice” cannot be established. There may also be breaches of Financial Services Authority rules as well as internal requirements such as missing documentation or a late submission (all cases must be submitted with 15 working days of an application being submitted to a Lender or Product Provider).Urgent remedial action is required. FQD will use a File Review Form to check all cases reviewed. The File Review Form has a detailed checklist to assist checking and allows comments and notes to be made as well as an overall grade to be given. Cases are graded in accordance with grades and definitions outlined below. The advisers T&C Supervisor and the network’s Compliance Director are copied in on all File Review forms and feedback to track issues, patterns and risks to aid development and to discuss and record at 1 to 1 meetings. Full details of the file checking procedures are noted in Appendix F. 8.2 Persistency and Cancellations All information on persistency & cancellations is recorded, & detailed information provided, in the T&C Report. This is then discussed during T&C meetings & committed to an Action Plan, if appropriate. 8.2.1 How it is measured Persistency figures will be maintained showing the percentage of cases that are still in force at the end of 12 & 24 month periods. The persistency figures will be available at the T&C Meeting. All regular premium policies will be monitored to see if they have lapsed within 12 & 24 months following the policy start date. These figures will be recorded by the New Business Administrator and / or the Commission Administrator & form part of the T&C Meeting Report. The definition of ‘persistency’ is the percentage of New Business cases that have ‘lapsed’ within a given period as above. This includes increments. A case will be deemed ‘lapsed’ if three monthly payments have been missed (if a monthly paid contract) or one annual premium (if an annual premium contract). 8.2.2 The Performance Standard The acceptable level of persistency for our Advisors is 5%. If it is between 5% & 10% the Advisor will be questioned & the problem investigated. If it is more than 10% this will be deemed unacceptable & the Advisor warned that if it is repeated for two successive twelve-month periods, their contract is likely to be terminated (the Compliance Officer will be informed). The above will apply to all cases that are deemed to be ‘in force’. The definition of ‘in force’ will be all regular premiums that are paid & which have not been ‘cooled off’. Any policies that are ‘cooled off’ will be investigated individually.

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8.3 Complaints The number & type of complaints will be monitored together with the outcome. A description of what constitutes a complaint & reference to the complaints procedure is in the Complaints section of the Compliance Manual. 8.3.1 How it is measured A record of written & upheld complaints against individual Advisors will be maintained. 8.3.2 The Performance Standard No more than two upheld complaints (of significance) in 12 months. 8.4 Range of Advice Provided The T&C Meeting Report is the working record relating to the range of advice provided. The New Business resulting from CA advice is recorded, & detailed information provided in the T&C Report. The supervisor will review, at the T&C meeting, the products that have been sold in the past 12 months in relation to the products that the CA is authorised to sell. This is useful in a number of ways as it could highlight product areas on which the Advisor is ‘getting rusty’ through lack of sales in a specific area, or may reveal a training need. 8.4.1 How it is measured A record will be created & maintained, of the business areas the Advisor is authorised to advise in, & the level of activity in each of those areas. 8.4.2 The Performance Standard The Advisor will show that over a twelve-month period, the business written or advised on has been appropriate. Where there are particular product types or areas of advice that have not been used, either because they were not appropriate or where the Advisor is not confident of their knowledge, then either remedial training will need to take place to show that the Advisor has developed or maintained the required level of competence in the given area, or the Advisor will not be authorised to advise in those areas. If there is evidence of a CA being biased towards certain products or providers, on which he might prefer to advice, resulting in serious implications in terms of best advice, corrective action must be agreed. 8.5 Performance on Courses The Supervisor will review the Advisors CPD log & assess the degree to which the Advisor has met the aims of the CPD scheme & their agreed training programme. 8.5.1 How it is measured A comprehensive overview of the individuals’ performance during any form of learning will

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be entered in the Advisors Training Log. After any training / coaching / development etc., Advisors will complete their CPD Log which will be viewed & signed off at supervisory meetings. 8.5.2 The Performance Standards The pass mark for external examinations will be those set by the relevant examining body. The pass mark for internal examinations, as well as failure criteria, is itemised in detail elsewhere in this document. 8.6 Transfer of Learning to the Job 8.6.1 How it is measured This will be facilitated by reviewing New Business files, the use of Role-play & where appropriate, accompanied visits. 8.6.2 The Performance Standards The Advisor & supervisor will implement the agreed action plans following any training / coaching / development activity. Following this period of implementation a further assessment will be made to ensure long-term retention & application to relevant new business. 9.0 SUPERVISORS The company approach to supervision is based on the premise that good quality supervision leads to effective client advice. The supervisory process threads its way through every aspect of advising clients & should not be seen as an extra task to be bolted on to everyday sales management procedures. 9.1 New Supervisors All new supervisors must have attained at least the first paper from the FPC/MAQ/CeMAP or CeFA qualifications and be working towards the full qualification (as relevant) before commencing employment with the Company. New supervisors will also be required to successfully complete Stage 1 training & undergo appropriate supervisor external training before starting their supervisory duties. 9.1.1 Initial Supervisors Training All supervisors will undergo appropriate supervisor external training. This will be completed by EQI Consulting. 9.1.2 Assessment Assessments of competency of the supervisor will be made in the following areas:- 1. Stage 1 training 2. Role-play assessments 3. T&C Meetings 4. Annual fitness & propriety checks 5. Knowledge of the T&C Scheme.

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If a prospective supervisor fails one or more areas, their position will be reviewed. If it is considered possible, EQI Consulting will establish an Action Plan to bring the individual up to an acceptable level within the first three months; otherwise the Supervisors employment will be terminated. 9.1.3 Assessment of Competence If the trainee supervisor demonstrates competence during all 5 stages of the above assessment then they will be signed off as Competent. 9.2 Supervisor’s CPD All supervisors will undergo initial training & subsequently embark on a course of training, as assessed appropriate by EQI Consulting. As well as providing refresher & development courses to maintain standards of specific regulatory requirements, the training & courses will be selected to satisfy the needs of the competent supervisor within a progressive, commercial sales environment. All supervisors must pass the periodic tests set by the EQI Consulting as well as an annual assessment of their application, analysis & supervisory skills. The formal review between the Training & Competence Supervisors EQI Consulting will be recorded in the Supervisors T&C log on an annual basis. 10.0 SUPERVISION AND SPANS OF CONTROL 10.1 Direct and Continuing Supervision All the Company's supervisors will take responsibility for a maximum of 35 Advisers. It is permissible to vary this ratio on a temporary basis by the allocation of members of one supervisors team to another, due to holidays, sickness or resignation. The Compliance Director will make such allocations & will ensure that the arrangements provide: 1. Consistent direct supervision for Trainee Advisors; & 2. Supervisory facilities for Competent Advisors. Although a supervisor can delegate tasks to another supervisor, they cannot relinquish overall responsibility for the Advisor unless the Compliance Director has instructed a complete change of supervisor. 10.1.1 Direct Supervision This is the level of supervision required to oversee & manage the activities of all New Applicants throughout the latter part of Stage 1, & all of Stage 2 of their training. In other words, it involves everything that takes place after the Initial Training Course, up to the point where the Advisor can be deemed competent.

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Supervisors are responsible for the activities & advice given by the Trainee Advisor until they are re-classified as a Competent Advisor. 10.1.2 Continuing Supervision This is the level of supervision required by Advisors who have been deemed competent after having successfully completed Stage 1 & 2 of the Scheme. 10.1.3 Responsibilities of the Supervisor when providing direct supervision Overseeing of Stage 2, which will involve: 1 Debriefing from ITC taking into account any Action Plans resulting from initial assessment; 2 Organising a timetable for accompanied visits with supervisor observing / Role-plays; 3 Briefing the Trainee Adviser before all accompanied visits / Role-plays, & identifying learning experiences in them; 4 Debriefing all New Applicants after all accompanied visits / Role-plays using appropriate documentation; 5 Identifying & carrying out appropriate training, coaching & counselling sessions which reflect needs identified in the T&C Meeting Report, Action Plans, OCLs etc; 6 Maintaining full & accurate records of all activities as required by the Scheme. 7 Liaising with the Training & Competence / Compliance Officer on relevant issues relating to the New Applicant; NB: Although individual Trainee Advisors will have different needs & requirements, it is likely that trainees during Stage 2 will need several informal meetings / discussions with their supervisor each month to ensure they are getting the level of support they require. However, it is imperative that a formal individual meeting with the supervisor, using the T&C Meeting Report / Agenda etc., takes place. 10.1.4 Responsibilities of The Supervisor When Providing Continuing Supervision 1. Carry out T&C meetings with competent supervisors & review all activities as outlined in the T&C meeting. Ensure that the T&C Meeting Report is a complete & meaningful record relating to the CA's activity. 2. Ensure that the CPD Log is updated & is a recent & true reflection of the CA's current position.

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3 Carry out sufficient accompanied visits / Role-plays with CA’s to ensure that required levels of competence are being maintained. A minimum of one full sales cycle (on an accompanied visit / Role-play basis) must be completed per year. 4 Review new business file checks & agree any training needs. 5 Carry out any training, coaching or counseling which has been identified as a result of assessments & evaluations. 6 Ensure CA's short & long-term development requirements are being fulfilled. This could mean input from the T&C Officer, Product Providers, or External Agencies along with input from the supervisor. 7 Ensure that all necessary information, updates, product alterations, legislative changes, admin changes & relevant sales information are passed to CA’s & understood. This will require confirmation at monthly supervisors meetings & recorded accordingly. NB: Although Competent Advisors should need less support, it is necessary that the T&C Meetings, using the T&C Meeting Report, take place. 11.0 RECORD KEEPING 11.1 T&C Meeting Report The following records will be recorded in the Adviser Information Database (AID) 1 Review of KPI’s 2 Review of current action plan 3 Revised ongoing action plan 11.2 CPD Log The following records will be recorded in the Adviser Information Database (AID) 1 Monthly Training Meetings (30hrs/year) 2 Courses in preparation for examination (20hrs/year) 3 Attendance at product provider conference (15hrs/year) 4 Private study i.e. client specific cases (10hrs/year) 5 In house training with line supervisor or training officer (25hrs/year) 6 Specialist reading i.e. specific articles (10hrs/year)

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11.3 Training & Competence Records The following records will be recorded in the Adviser Information Database (AID) Includes: - 1 T & C Skills & Knowledge Assessment 2 External Qualification Certificates 3 Stage One Training Form 4 Stage One Observation Aids, In-house Tests, T&C Scheme Test, T&C Meeting Reports 5 Certificate of Passing Stage One 6 Stage Two Training Form 7 Stage Two Observation Check Lists, KPI Assessments, T&C Meeting Reports, File Checks 8 Stage Two CPD Log 9 Certificate of Competency 10 Competent Adviser Training Form 11 Competent Adviser Observation Check Lists, KPI Assessments, T&C Meeting Reports, File Checks 12 Competent Adviser CPD Log 13 File Check Correspondence NB: Copies of the FSA application forms for individual CF30 Authorisation and AR Status will be kept as part of the Company’s compliance record. 12.0 APPENDICES A - Recruitment Process B – Stage 1 Training C - T&C Meeting D - Fitness and Properness including debt monitoring E – File Checking Procedures

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APPENDIX A RECRUITMENT & REFERENCING PROCEDURES This document provides an overview of the recruitment and referencing procedures for new ARs from initial application to live sales. 1. Receipt of Supplementary Form The recruitment process commences on receipt of Supplementary Form. On receipt of the Supplementary Form, the Compliance Administrator has 24 hours to open up the applicants account and send log in details. Once the account is activated, the applicant should then upload ALL of the required supporting documentation immediately. The BDM should guide and assist with this to ensure that ALL of the necessary documentation is submitted. 2. Initial vetting The Compliance Administrator is required to review the Supplementary Form for quality and assess its completeness. Any deficiencies should be highlighted and gaps missing information noted. Initial checks to be carried out including; check individual /firms name on FSA register (http://www.fsa.gov.uk/register/home.do) and checking whether applicant has ever been refused FSA authorisation (http://www.fsa.gov.uk/Pages/Library/Communication/Notices/index.shtml). Note links, Google applicants name, check records and see if ever applied before to join and if application declined. 3. Welcome Letter Within 3 working days (to allow the applicant sufficient time to upload all of their supporting documentation) the standard welcome letter template, see Appendix 1, must be issued. A copy of this must be retained in “Adviser Documents” and notes made in the “Process” section of AID system. Required supporting documents are: - • Fully Completed FSA Form A • Certificate of Incorporation (for Limited Companies or Limited Liability Partnerships) • Consumer Credit Licence • Data Protection Registration • Copies of most recent accounts • Business Plan • Business Bank Account Details + 1 months business and 1 months personal bank statements • Credit Report for every adviser and controller i.e. Owner or Director • Qualification certificates for every adviser • Proof of ID and Proof of address for every adviser and controller • TCF Questionnaire • Business Stationery

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3. Employment References All employment references must be requested within 3 days of the applicant applying to join – see step 1. Evidence of these requests must be stored within “Adviser Docs” and notes made in the “Process” section of AID system. Employment references must be obtained for the last 5 years. Any and all gaps and deficiencies must be explored and explained. As a minimum we can proceed to the next stage of the recruitment process (contract and FSA submission) where we have received the most recent reference – as long as this covers the most recent 12 month period. If not we must go back to the previous reference before that and so on until the last 12 months is covered. All other outstanding references must be obtained but this will not stop the firm from going live. 4. Character / Professional References The minimum requirement will be to obtain a character reference from a professional individual who has know the individual (adviser or controller) for at least 5 years. If the individual has been self-employed for at least the last 5 years then the character reference must be an accountant as well as one additional character reference. 5. Stage 1 Training The BDM who recruits the applicant will act as T&C Superviser in accordance with the T&C Scheme. This will include completing Stage 1 training. Where no BDM exists, it will be passed to an internal T&C Superviser for training and development. Stage 1 training must passed competently and be evidenced in the AID system and also in “Adviser Docs”. Stage 1 training includes role play assessment as well as knowledge testing – see (a) and (b) below. A separate agenda exists for Stage 1 training. Stage 1 training should be completed within 10 working days of an applicant applying to join the network.

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5. (a) Knowledge Validation All applicants must demonstrate that they have the appropriate levels of knowledge to join the network. The T&C Superviser is responsible for ensuring that the applicant successfully takes and passes the following knowledge validation exercises: - • General • Money Laundering • UK Financial Services, Regulation and Ethics • Results must be stored in the AID system. 5. (b) Role Play Assesssment – skills assessment All applicants must successfully demonstrate that they have the appropriate levels of skills to join the network. The T&C Superviser is responsible for ensuring that the applicant successfully 6. FSA Register and AR Contract / Member agreement Within 24 hours of the following steps being fully completed: - o Stage 1 Training o All outstanding information has been received – see welcome letter in point 2 o Most recent employment / network reference has been received o Character reference has been received (a) Forms will be submitted to the FSA to appoint the AR. (b) Contract will be issued (pdf and via email where possible). (c) Form A will be submitted – if IFA, Director or Partnership applies. 7. Follow up Friday Every Friday the Compliance Administrator will be expected to follow up and chase up on all outstanding issues. This includes items from the advisers themselves, references (employment / network as well as character and the FSA. All chases need to be evidenced in Adviser Docs as well as Process. Issuing the Contract agreement and addition to the FSA Register to not constitute a “go live” date but show the individual is committed to joining the network. 9. Go Live

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We will be in a position to make the AR firm live once the following steps have been met: - • Stage 1 training is complete and evidenced in the AID system • All outstanding information has been received – see welcome letter in point 2 • Most recent reference has been received • Character reference has been received • AR Contract has been signed and returned • Firm is live on the Financial Services Authority Register • If pensions and investment permissions required we will also need to wait for the individuals to be approved by Financial Services Authority. An adviser must not undertake regulated activities until they have received formal sign off and written confirmation of appointment from the Compliance Administrator or someone who holds a position of significance within the networks. Once an applicant has been made live, the T&C Superviser must go into the AID system, check all fields and issue S1 Certificate. If adviser has debts T&C Superviser must be notified to monitor.

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Welcome Letter Template APPENDIX 1 Private & Confidential Name Add 1 Add 2 Add 3 Postcode Tuesday, 22 June 2010 Dear Application for Appointed Representative Status I would like to confirm that we have received your application to join Julian Harris Mortgages Limited / Julian Harris Financial Consultants as an Appointed Representative and would like to start by thanking you for selecting us as your chosen Principal firm. I have detailed below the outstanding information that we require to support your application. If you are unable to supply any of this, please let me know as soon as possible and likewise if you have any questions or queries regarding these requirements please do not hesitate to contact me. In order for us to appoint you as an AR we are required by the FSA to carry out certain due diligence checks. These checks are linked to your assessment of fitness and propriety so it is vital that you are open and honest with me and respond fully in writing to all points raised. Where something is not applicable or unavailable please make this clear. Where possible, please visit our website www.julianharris.net and use your login details to scan and upload the outstanding information. If you are unable to do this please find enclosed a pre-paid envelop for your convenience. I would be grateful if you would return the information within the next couple of days. If you prefer to scan and upload please call or email me to confirm that this has been done. I have detailed below the outstanding information that we require to support your application. If you are unable to supply any of this, please let me know as soon as possible and likewise if you have any questions or queries regarding these requirements please do not hesitate to contact me. Yours Faithfully Compliance Administrator

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Outstanding Information • Please complete the Form A and upload / submit to me asap. • Please confirm if you, or any firm you have ever been associated with, had a lender or insurance agency removed, varied or terminated? If so, please provide full details. • Please confirm whether in the last 5 years you have applied to join another network or financial institution and either had that application (a) rejected, (b) terminated or (c) voluntarily withdrawn your application prior to acceptance. If so, please provide full details below. • Confirm if you have received any complaints in the last 5 years • Draft copies of your new business stationary • Please provide details of any adverts of websites that you currently have running. • Please provide full contact details for your character / professional reference so we can make the reference request, • Please provide certified proof of certified ID/Address • Please upload or forward a copy of your Consumer Credit License • Please upload or forward a copy of your latest utility bill, not more than 3 months old • Please upload or forward a copy of your passport or driving licence • Please upload or forward a copy of 1 months business bank statement and 1 months personal bank statement • Please upload or forward your latest set of accounts or self assessment papers from HMRC • Please provide more detail, address, email address for previous employers so that we can email a reference request. • Please provide 5 full years employment history. • Please provide a business plan and / or your most recent accounts. Please upload or provide copies of Qualification Certificates • Provide confirmation of Rights to remain in the UK. Please forward a copy of your Data Protection Registration. • If you have been self employed, please confirm the name and role of your firm and provide accountants details so we can confirm your self employed status. • Please provide us with a copy of your Certificate of Incorporation (Limited Companies or Limited Liability Partnerships only)

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• Credit Search: would you please provide a copy of your own Experian or Equifax credit report. Alternatively please provide your signed, written permission for us to obtain one. • Please read the attached Treating Customers Fairly documents, complete and return the TCF Questionnaire.

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APPENDIX B-STAGE 1 TRAINING AGENDA IntroductionIntroduction to JHM Ltd / JHFC Explain about the company. Established in 1991. Operate from own premises in Ashford in Kent. Office owned outright. Strength of company, no loans or mortgages. Introduction to Donna – Office Manager, responsible for day to day running of office and commissions. Questioning - Advisers background etc. Soft fact finding on adviser and his/her company. Type of business, where is business coming from, whether they charge fees etc. Agenda for training session What they can expect from next 1 ½ hours ie go through the system. What is on the system, where to find documents, information, commission information etc. Charges, fees & commissions Take them to “Commission Payment” and explain the fee structure. 15% deduction from gross fee received. No monthly fee, no additional PI fee. Annual FSA fee (£250 MA / £1,300 IFA-both approximate) payable around July each year. No applicable until next year. Can be paid monthly with additional 5% charge. (IFA 19% reducing to 12 ½% + £95 monthly fee) Cost of Tri Gold, free Assureweb etc. What can stop them getting paid. Files not sent in for checking. File sent in and not up to standard. Remedial action requested by file checker and not evidenced that remedial action has been done. Commission payment less than £250 or we have claw-back on the account which may also stop payment. Commissions Payments fortnightly with the process starting from Tuesday when e-mail goes out with amount of commission being paid, Wednesday hard copy statement in post with breakdown of commissions. Friday sent by BACS and following Tuesday their bank account is in clear funds File Checking Process Talk through file checking processes and procedures; grades (Clear, Unclear and Unsuitable) given, remdial work and implications of not getting files in on time or submitting incomplete files. Also discuss file checking common errors using last 3 bulletins. Compliance documents 1 Go to compliance documents. All docs in alphabetical order and in word or pdf so can be saved outside intranet if personalised. Role play – sales process Ask adviser to go though his/her sales process and ensure that it is correct. (question if necessary) and ask them go through (Role play) how they present and Initial Disclosure Document and how they go from IDD to fact find.

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Compliance documents / Process Trainer now goes through compliance process. I make up an imaginary file with the adviser with the documents that should be in the file that is submitted to us for file check:- Document 1 Signed copy of IDD Document 2 Fully completed fact find – emphasising completeness, accuracy on income and budget planner etc. Trigold FF should be used Document 3 Proof of income (explain what is acceptable) Document 4 Fee agreement (if applicable) Document 5 Source Results (Tri gold/Assureweb) Document 6 Key Facts Illustration / Life illustration Document 7 Application form Document 8 Money laundering (explain Low premium exemption) Document 9 Suitability Report – Trigold SR to be used. Discuss update requirements to SR template (don’t forget debt consolidation). Go through each section and how it should be amended in to their own words. Which sections can be deleted etc. Check that they understand process each step of the way. Submitting files for checking and payment Go to New Business submission forms and go through submission forms available. Explain document submission order and that we check date order. Submit pdf format only to [email protected] Explain requirements for G I Business:- IDD, Evidence of research, Illustration, Application, Needs & Demands from provider’s website. Process for completed business Explain the New Business Register Information Form to be completed and e-mailed to Donna for every bit of business that completes. Also explain that if mortgage applied for via a mortgage club to notify the mortgage club of completion, which will speed ip payments

Compliance documents (2)

Take adviser back to top document of “Compliance Documents” and work down explaining relevant documents to thme. This differs from MA to IFA. Point out where Compliance Manual is in case FSA ask them where they keep it. Also point out the Money laundering Training Material which should be read before tests (3 pages for part 1 and 10 pages part 2) and enter time in CPD log.

This also jogs your memory to talk about stationary wording and financial promotions, all commissions to be paid through JHM or JHFC bank accounts, CI re broking etc.

T & C – Test guidance

Now take the to T & C and guide them into the area where the tests are held. Explain how to access tests and to ensure clicking save after each test and not to click save ½ way

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through a test. Also explain that when thye click save the system automatically changes to FAIL but that it doesn’t mean they have failed but that we need to mark them.

Explain the written answers to Test 1

Take them to Test 2 and I generally ask them to answer question 4, which shows them that it is multi choice and may be more than 1 answer

Take them to test 3 and ask IFS’s to answer question 1 and ask MA’s to answer question 4.

This gives a good idea of advisers knowledge.

CPD log

Take them to CPD log. Ask the what CPD stands for! Explain what can be entered in the log. Count them down 5 boxes and get them to write in that days training and log in 1 ½ hours so that they can see the actual hours reduce to 108.5 left to do.

Explain “compliance Memos” and “Meeting Calender”.

Questions and Finish

Options for adviser to ask questions and for trainer to cover off anything that they feel is unclear or that the adviser struggled with.

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Appendix C T&C Meeting / 1:1 Agenda Adviser: Date: Compliance / T&C Officer: Initial Preparation – must be done at least 48 hours before T&C Meeting

The following reports must be produced from the AID system and stored in Adviser Docs. This information must be reviewed and any issues, comments or points to discuss noted. This will form the agenda for your T&C Meeting

Report Comments / Issues / Points to discuss

Guidance

Key Performance Indicators

How many cases have been checked versus written? What is current pass rate? What issues or themes are arising? Is an action plan required?

Regulated Business Provider

Is there a bias towards certain providers? Investigate why. Consider commission bias over suitability and affordability

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NBL Report

Is there a bias towards certain providers? Investigate why. Consider commission bias over suitability and affordability

Outstanding Compliance Memos

Is remedial work outstanding on any cases? Why? Provide appropriate timescales for resubmission. Discuss issues and concerns

CPD Log

Has CPD been recorded? Is it relevant? Appropriate?

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T&C Supervisers Comments & Summary Yes No N/A

Is File Quality acceptable?

Is Business spread acceptable?

Is Provider spread acceptable?

Is Persistency acceptable?

Has CPD log been completed satisfactorily?

Review complaints (if applicable)

Have any client documents been held for more than 24 hours?

Review latest accounts?

Have any Actions and Training Plans been discussed and agreed? Signed (Adviser): Date: Signed (Compliance / T&C Officer): Date

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Appendix D

ANNUAL FITNESS AND PROPERNESS

CHECK

Adviser:

Date:

Location:

Compliance Officer / T&C Superviser:

The report is continued within the following pages but the compliance officer makes the following summary:-

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Are the following readily available to the adviser ?

Compliance Procedures?

Is it up to date ? Yes / No

Complaints Procedures?

Is it up to date ? Yes / No

Are accounts and book keeping satisfactory ?

What form does the bookkeeping take and is it sufficiently detailed? _______________

_____________________________________________________________________

_____________________________________________________________________

Is there a separate business bank account ?

Is a bank reconciliation done monthly?

Ask to see business and personal bank account statements - Comments:___________

_____________________________________________________________________

Is the representative solvent ?

Commission Income for the previous year___________________________________

Mortgage amount______________________________________________________

Loans_______________________________________________________________

Other Major expenditure________________________________________________

Other debts___________________________________________________________

Has client money been handled ?

Has an accountant been appointed ?

Check advisers records in respect of any reported complaints. Comments:_________

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_____________________________________________________________________

_____________________________________________________________________

Has there been any unreported complaints?

Have any financial promotions been issued that have not been authorised?___________________________________________________________

_____________________________________________________________________

Ask to see general Insurance adverts (check no unreported financial services references). Comments:___________________________________________________________

_____________________________________________________________________

Is the credit check clean ?

Does the Representative / Adviser have any Introducers ?

Nb. An Introducer is defined as an individual or company that introduces business to you for remuneration or reciprocal business ?

Has an introducer Agreement been completed for each Introducer and copy passed to Julian Harris?

Are consumer credit and data protection licenses up to date ? Yes / No

Are the stationary and business cards up to date ? Yes / No

Has the adviser any conflicting interests ? Yes / No

Are they being disclosed to customers ? Yes / No

Has there been any pre-contract activity ? Comments:__________________________

_____________________________________________________________________

_____________________________________________________________________

Are there any other people within practice having an influence over financial services activities, which I have not referenced checked. Comments:_____________________________

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______________________________________________________________________

______________________________________________________________________

Other Comments:________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

Addition to Annual Fitness & Properness Check

1) Inspect bank account statements for business and request a copy of a recent personal bank statement to prove solvency.

2) If there are any concerns make an assessment and implement increased compliance supervision.

3) Was the individual / firms accounting projection accurate? If not, why?

4) Request financial information regarding any associated activity? Could it be a burden to this firm?

5) Are any of the directors taking withdrawals beyond which the AR can afford – investigate and terminate contract unless altered.

6) Are any problems identified deteriorating?

Notes: - ______________________________________________________________

_____________________________________________________________________

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_____________________________________________________________________

_____________________________________________________________________

Signed: -

Adviser / Representative …………………………………………………

On behalf of …………………………………………………

Julian Harris Financial Consultants /

Julian Harris Mortgages Ltd

Date …………………………………………………

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Debt Monitoring (3 month report)

Adviser: Date: Compliance / T&C Officer:

Will the debt affect the advisers selling practices?

Have they come to an arrangement with their creditors?

Do you have evidence of this?

How much is it costing them each month?

Are the payments up to date?

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Do you have evidence to confirm this?

Is the debt reducing?

Do you have evidence to confirm this?

Signed (Adviser): Date: Signed (Compliance / T&C Officer): Date:

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Appendix E

Julian Harris Financial Consultants

IFA OBSERVATION AID – FACT FIND INTERVIEW

PERSONAL DETAILS:

NAME OF ADVISER:

TYPE OF INTERVIEW: LIVE CALL ROLE-PLAY

NAME OF ASSESSOR:

NAME OF CLIENT:

DATE OF OBSERVATION:

RESULT: PASS

PASS WITH DEVELOPMENT NEEDS

FAIL

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FEEDBACK GIVEN: YES NO

DAP ATTACHED: YES NO

ADDITIONAL INFORMATION: NUMBER OF PAGES (INCLUDING THIS ONE): ______

FEEDBACK GIVEN? YES NO

SIGNATURE OF ADVISER:

SIGNATURE OF ASSESSOR:

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CHECKLIST FOR FACT FINDING

Did the Adviser do or display the following?

1. Introduction – the Adviser should confirm his / her name and that of their company, organisation or practice C CD F NA

2. M* Adviser must explain polarisation - state their status as an IFA C CD F NA

3. M* Adviser must provide an authorised Business Card ( normally at the beginning of the meeting ) and confirm contact details

C CD F NA

4. M* Adviser must provide a Terms of Business letter, normally at the beginning of the meeting (unless already supplied).

C CD F NA

5. M* Adviser must explain the genuine purpose of the meeting C CD F NA

6. Adviser should introduce & explain the purpose of the Financial Planning Questionnaire, highlighting ‘Know the Client’ / ‘Best Advice’

C CD F NA

7. Adviser should ask both open and closed questions to establish the client’s current personal and financial situation

C CD F NA

8. Adviser should ask questions and discuss the client’s current and future financial needs and record their objectives and wishes

C CD F NA

9. Adviser should seek clarification to financial needs/aspirations to a point where the client(s) confirms the adviser’s understanding

C CD F NA

10. Adviser should record all details accurately and legibly on the Financial Planning Questionnaire

C CD F NA

11. M* Adviser must explain the relationship between Risk and Reward. Confirm client’s attitude to investment risk

C CD F NA

12. Adviser should complete all sections on a company approved Financial Planning Questionnaire

C CD F NA

13. M* Adviser must display no product or company bias C CD F NA

14. Adviser should make no unfavourable remarks about existing plans or life companies

C CD F NA

15. Adviser should ask the client to prioritise their agreed needs. Confirm adviser’s agreement with these ( or not ) – discuss any differences of opinion

C CD F NA

16. Adviser should demonstrate an understanding of the client’s priorities C CD F NA

17. M* Adviser must demonstrate understanding of the Client’s ability to pay/affordability – agree a budget

C CD F NA

18. Adviser should gain commitment to proceed with advice at further meeting C CD F NA

19. M* If applicable, Adviser must advise Client of restricted authorisation & explain re-appointment with a qualified colleague

C CD F NA

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20. M* Check verification of identity completed ( if not already done so ) C CD F NA

21. Adviser should establish date of next meeting C CD F NA

SUPERVISORS’ GUIDANCE NOTES

KEY FOR SCORING CHECKLIST:

C = Competent;

CD = Competent with Development Needs

F = Fail

NA = Not applicable

PASS MARK: All Mandatory areas to be C or CD + 8 out of 13 non-mandatory areas (but this can be reduced by excluding any N/As )

GIVING FEEDBACK / AGREE STRENGTHS AND DEVELOPMENT NEEDS

1. Establish / Confirm the objectives of the review and the benefit to the Consultant 2. Ask the Consultant how he/she felt the client meeting went 3. Establish what the Consultant felt went well 4. Explain what you observed went well 5. Summarise / agree 6. Establish what the Consultant felt didn’t go so well 7. Explain what you observed went less well 8. Summarise / agree 9. Establish the Consultant’s view on his / her priorities for future development 10. Agree / confirm these – complete Development Action Plan as Appropriate

NOTES:

SPECIFIC OBSERVATIONS – GIVE EXAMPLES:

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Julian Harris Financial Consultants

IFA OBSERVATION AID – PRESENTATION INTERVIEW

PERSONAL DETAILS:

NAME OF ADVISER:


NAME OF ASSESSOR:

NAME OF CLIENT:


RESULT: PASS


FAIL

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ADDITIONAL INFORMATION: NUMBER OF PAGES ( INCLUDING THIS ONE ): ______




DID THE ADVISER DO OR DISPLAY THE FOLLOWING?

1. Re-establish the relationship / build on rapport from earlier meeting C CD F NA

2. Re-affirm the commitment C CD F NA

3. Clarify the client’s / adviser’s needs, objectives and reasons for proceeding C CD F NA

4. Present an agenda for the meeting C CD F NA

5. Re-state agreed need/problem – explain how proposed solution would meet this C CD F NA

6. M* Justify the choice of product provider explain research process C CD F NA

7. Answer any questions the client asks questions appropriately C CD F NA

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8. M* Keep it simple – the adviser should clarify any confusion appropriately C CD F NA

9. Accurately explain Key Features / Benefits of the recommended plan C CD F NA

10. M* Provide / explain KFD / Illustration before client signs application C CD F NA

11. Display accurate knowledge of recommended plan / company details C CD F NA

12. Explain accurately any tax implications of the recommended action C CD F NA

13. Use only approved visual aids C CD F NA

14. Explain the long term nature of the plans C CD F NA

15. Highlight accurately surrender values or not as appropriate C CD F NA

16. M* Adequately explain the costs and charging structure of the plan C CD F NA

17. M* Disclose commission – ensuring that no plan bias is evident C CD F NA

18. Make no uncomplimentary remarks about existing plans or life companies C CD F NA

19. Explain that the value of units can fall as well as rise C CD F NA

20. M* Justify fund choice – how it matches the agreed risk profile on FF C CD F NA

21. M* Explain further meeting needed, where client requests changes C CD F NA

22. M* Client agrees to proceed to application stage without pressurising C CD F NA

23. Gives Client opportunity to complete application, explaining disclosure rules C CD F NA

24. Ensure that the application form was fully completed and signed C CD F NA

25. Ensure Client checked details prior to signing C CD F NA

26. M* Advise Client of their statutory rights to cancel C CD F NA

27. Make a record of reasons if a plan is being replaced or lapsed C CD F NA

28. Provide accurate explanation for replacement (if applicable) C CD F NA


30. Arrange a date for first service or review meeting C CD F NA

31. Explain the next steps in the process (e.g., underwriting, medical, etc. ) C CD F NA

32. Observe rules relating to ‘special care’ cases C CD F NA

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C = Competent;


F = Fail

NA = Not applicable




NOTES:


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Julian Harris Mortgage Limited

OBSERVATION AID – FACT FIND INTERVIEW

PERSONAL DETAILS:

NAME OF ADVISER:


NAME OF ASSESSOR:

NAME OF CLIENT:


RESULT: PASS


FAIL

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ADDITIONAL INFORMATION: NUMBER OF PAGES (INCLUDING THIS ONE): ______




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CHECKLIST FOR FACT FINDING

Did the Adviser do or display the following?

20. Introduction – the Adviser should confirm his / her name and that of their company, organisation or practice C CD F NA

21. M* Adviser must explain their independent status (if applicable) C CD F NA

22. M* Adviser must provide an authorised Business Card ( normally at the beginning of the meeting ) and confirm contact details

C CD F NA

23. M* Adviser must provide and explain the firms Initial Disclosure Document unless already supplied), and agree fee basis (e.g. advised sale/whole of market).

C CD F NA

24. M* Adviser must provide and explain the firms Terms of Business letter, normally at the beginning of the meeting (unless already supplied).

C CD F NA

25. M* Adviser must explain the genuine purpose of the meeting C CD F NA

26. Adviser should introduce & explain the purpose of the Mortgage Questionnaire, highlighting ‘Know the Client’ / ‘Best Advice’

C CD F NA

27. Adviser should ask both open and closed questions to establish the client’s current personal and financial situation

C CD F NA

28. Adviser should ask questions and discuss the client’s current and future financial / mortgage needs and record their objectives and wishes.

C CD F NA

29. Adviser should seek clarification to financial (mortgage & protection) needs/aspirations to a point where the client(s) confirms the adviser’s understanding

C CD F NA

30. Adviser should record all details accurately and legibly on the Mortgage Questionnaire

C CD F NA

31. Adviser should make no unfavourable remarks about existing plans or life companies

C CD F NA

32. Adviser should ask the client to prioritise their agreed needs. Confirm adviser’s agreement with these ( or not ) – discuss any differences of opinion

C CD F NA

33. Adviser should demonstrate an understanding of the client’s mortgage priorities

C CD F NA

34. M* Adviser must demonstrate understanding of the Client’s ability to pay/affordability – agree a budget

C CD F NA

35. Adviser should gain commitment to proceed with advice at further meeting C CD F NA


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21. Adviser should establish date of next meeting C CD F NA



C = Competent;


F = Fail

NA = Not applicable




NOTES:


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Julian Harris Mortgage Limited

OBSERVATION AID – PRESENTATION INTERVIEW

PERSONAL DETAILS:

NAME OF ADVISER:


NAME OF ASSESSOR:

NAME OF CLIENT:


RESULT: PASS


FAIL


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TRAINING PLAN ATTACHED: YES NO

ADDITIONAL INFORMATION: NUMBER OF PAGES ( INCLUDING THIS ONE ): ______




Checklist for Presentations

DID THE ADVISER DO OR DISPLAY THE FOLLOWING?

33. Re-establish the relationship / build on rapport from earlier meeting C CD F NA

34. Re-affirm the commitment C CD F NA

35. Clarify the client’s / adviser’s needs, objectives and reasons for proceeding C CD F NA

36. Re-state agreed mortgage / protection need/problem – explain how proposed solution would meet this remembering to explain the following:-

Repayment V’s Interest Only (or part and part); Amount and term of new mortgage, Description of product offered; Initial Interest rate & period; How often is interest rate calculated; APR; Redemption Penalties; and any other special features

C CD F NA

37. M* Justify the choice of Lender / Product Provider explain research process

C CD F NA

38. Answer any questions the client asks questions appropriately C CD F NA

39. M* Keep it simple – the adviser should clarify any confusion appropriately C CD F NA

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40. Accurately explain Key Facts Illustration / Key Features Document / Benefits of the recommended plan / scheme

C CD F NA

41. Display accurate knowledge of recommended mortgage / protection plan. C CD F NA

42. M* Disclose commission – and explain the Fees associated with the mortgage.

C CD F NA

43. Make no uncomplimentary remarks about existing plans or life companies C CD F NA

44. M* Client agrees to proceed to application stage without pressurising C CD F NA

45. Gives Client opportunity to complete application. C CD F NA

46. Ensure that the application form is fully completed and signed C CD F NA

47. Ensure Client checked details prior to signing C CD F NA

48. M* Advise Client of their statutory rights to cancel (protection only) C CD F NA

49. Make a record of reasons if a plan is being rebroked (if applicable) C CD F NA

50. Provide accurate explanation for replacement (if applicable) C CD F NA

51. Check Provision of Information Checklist C CD F NA


53. Explain the next steps in the process ( e.g., underwriting, credit checks, medical, etc. )

C CD F NA

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C = Competent;


F = Fail

NA = Not applicable

PASS MARK: All Mandatory areas to be C or CD + 9 out of 14 non-mandatory areas (but this can be reduced by excluding any N/As ) Always refer to the Standards Guide if in doubt



NOTES:


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FACT FIND INTERVIEWS – GUIDANCE NOTES The following notes confirm the standards that the firm expects Advisers to work to in both live situations with clients and also in role-play exercises as required during both induction training and annual assessments. Areas marked “M” are mandatory requirements and failure to explain these points adequately would result in a non-competent interview. CHECKLIST Observed calls (and role-plays) which form part of the normal assessment process are conducted with these standards in mind. Observers / assessors are supplied with checklists which mirror these standards. In order to be deemed competent in either a fact find or sales presentation interview, Advisers must complete all mandatory areas (designated with a “M” in the notes that follow) and also complete 70% of all non-mandatory areas. REQUIREMENT The Adviser would be expected to demonstrate the following: INTRODUCTION / BUSINESS CARD / TERMS OF BUSINESS LETTER

At the beginning of the meeting, the adviser must give their full name and identify himself or herself as an Independent Mortgage Adviser. M The client must be provided with an authorised Business Card, Terms of Business letter and Initial Disclosure Document (IDD), normally at the beginning of the meeting. The adviser must correctly explain the contents and purpose of the Terms of Business letter and IDD at the beginning of the meeting and provide a copy (unless already done so above). The Adviser must not only give a copy of the Terms of Business letter and IDD before any business is discussed but also give a short and accurate explanation of its contents. (A full explanation is usually required for role-plays to demonstrate the individual’s understanding of all the points). INTRODUCE AND EXPLAIN NECESSITY OF THE FACT FIND M It is necessary to explain to the client(s) the genuine reason for the meeting so they are clear that the meeting is to discuss their financial needs. The adviser should introduce and explain the purpose of the Protection Questionnaire or Fact Find, highlighting “Know Your Client”. It is sufficient to explain that the purpose is to ask questions to identify the client’s current situation and future plans and ambitions and possibly suggest solution to those needs. It is not sufficient to simply say “… to complete a Fact Find”. Having explained the purpose of the meeting, it is also good practice to explain to the client the reason for filling in the document. It is not good practice to say “I have to fill this out because of

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the legislation”. The clients should perceive a benefit to themselves of going though the fact finding process, in that way they will more appreciate the service that is being provided. It is not necessary to use the phrase, “Know Your Client”. An explanation in the advisers` own words to convey this point is sufficient. OBTAIN FULL DETAILS OF THE CLIENT’S SITUATION / ASK QUESTIONS. Sufficient questions should be asked to have a full and correct picture of the Client’s current situation and policies, which must also include all existing arrangements e.g.: existing protection plans.

Advisers should ensure they have asked for full details of all policies under each section.

The Adviser should ask questions and discuss the Client’s current and future mortgage and protection needs and objectives. This is the opportunity to discuss with the Client what their aims and ambitions are for themselves and their families.

Advisers should ask the Client about their hopes and aims for the future and question to clarify the detail of what is discussed. Advisers should not make assumptions.

The results of these discussions need to be recorded in the Fact Find.

SEEK CLARIFICATION / CONFIRMATION

It may be that adviser believes he/she has established the financial needs and assume that the client agrees. The requirement is that the Adviser needs to seek clarification in relation to the needs and preferences to a point where the Client(s) confirm the advisers` understanding. This needs to be tested by summarising their understanding of events and asking the clients if they agree. It is important that the Client and Adviser are in agreement on those needs identified and the level of priority each should be given. Where discrepancies occur these should be documented on the form for inclusion in any subsequent reason why letter.

The Adviser must record all details accurately and legibly on the Fact Find. Legibility is important so that others can read the information, to validate advice, defend complaints or carry out any other review that may be required.

FULLY COMPLETE THE FACT FIND DOCUMENT The fact Find can be checked by a visual examination of the Financial Planning Questionnaire after the meeting. The adviser should not leave blanks but it is also insufficient to put a line through a section or “N/A”. Advisers should write “none” or a phrase which indicates that the questions were asked but the result was negative or there were no details to record.

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ASK THE CLIENT TO PRIORITISE.

As the meeting draws to a close it is useful to get the Client to restate their needs and preferences, as it ensures that both adviser and Client are both clear about what the Client wants and how important it is to them. Further to the discussion the adviser should highlight any other shortfalls of which the client is unaware.

DEMONSTRATE AN UNDERSTANDING OF THE CLIENT’S PRIORITIES.

Advisers should establish and agree with the Client(s) what their priorities are in relation to the needs identified by the Fact Find.

The Adviser has the opportunity to insert his / her own interpretation of the client’s preferences. Where this interpretation differs from that of the client, the differences should be discussed and resolved, before going forward. Where differences still exist at the end of the interview and these are reflected in the advice given, reference should be made in the Reason Why Letter that follows completion of the case.

Even if the majority of the Fact Find is completed well, just one blank box, or a section crossed through without any explanation will mean the document is incomplete. Only if the answer to the first question in a section removes the necessity to answer further questions in that section, then it may be left blank.

DISPLAY NO PLAN BIAS

M Advisers will be displaying product bias if they try to pressure the Client away from an established need to a less important need (unless it is the client’s interest). This includes recommending a higher commission earning product where a more suitable lower commission paying product is available.

MAKE NO UNFAVOURABLE REMARKS ABOUT EXISTING PRODUCTS OR OTHER LENDERS/PROVIDERS.

This could be either a slight insinuation or a very obvious comment. Advisers should remain positive about existing policies and other companies, their products and Representatives. This does not prevent them from commenting that they consider the client may benefit from a review, or where alternative products may be more appropriate, as long as these matters are always broached sensitively and professionally.

DEMONSTRATE AN UNDERSTANDING OF THE CLIENT’S ABILITY TO PAY. M Advisers should identify the Client’s income and expenses in order to assess affordability for the products recommended.

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GAIN COMMITMENT TO ACTION.

One of the aims of the meeting should be to gain the Client’s commitment to the identified needs, together with a commitment to moving forward at the next meeting.

If the approach is that the client has

Agreed the need Agreed product or type of product Agreed to a second meeting after the Adviser has researched the market Confirmed he / she is willing to follow the recommendations, provided the product satisfies

the need and falls within the agreed budget.

Then the second interview should run smoothly, in accordance with the standards set by the firm.

LIMITED AUTHORITY

M (if applicable) If the adviser cannot advise in a certain product area (Lifetime Mortgages, for example), then he / she must advise the Client that they are not licensed and explain the need for a re-appointment, if necessary, with a qualified colleague.

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PRESENTATION INTERVIEW – GUIDANCE NOTES

The following notes confirm the standards that the firm expects Advisers to work to in both live situations with clients and also in role-play exercises as required during both induction training and annual assessments. Areas marked “M” are mandatory requirements and failure to explain these points adequately would result in a non-competent interview. CHECKLIST Observed calls (and role-plays) which form part of the normal assessment process are conducted with these standards in mind. Observers / assessors are supplied with checklists which mirror these standards. In order to be deemed competent in either a fact find or sales presentation Interview, Advisers must complete all mandatory areas (designated with a “M” in the notes that follow) and also complete 70% of all non-mandatory areas.

REQUIREMENT The Adviser would be expected to demonstrate the following: RE-ESTABLISHMENT OF THE RELATIONSHIP

Before moving into the main business of the meeting, advisers should re-establish rapport with the Client. This is achieved by referring back to relevant information from the Fact Find and finding out how events have changed (it could be work related or social). It is important that the adviser re-creates the climate established on the previous occasion so the Client feels comfortable.

RE-AFFIRM COMMITMENT

Advisers should re-state where they got to at the last meeting and the principle areas that they agreed to address. Advisers should also check whether anything has changed since the last meeting, which might affect the purpose of this meeting. Finally, they need to ask the Client if the areas addressed are still of prime importance.

Remember that if the approach is that in the first interview, the client:

Agreed the need Agreed a product or type of product Agreed to a second meeting after the Adviser has researched the market Confirmed he / she is willing to follow the recommendations, provided the product satisfies

the need and falls within the agreed budget.

Then the interview should run smoothly.

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CLARIFY OBJECTIVES AND REASONS

As well as re-affirming commitment, it is also useful to remind the Client, or ask the Client to reiterate, why those areas were important. This also gives the Client the opportunity to add relevant points or clarify in another way the purpose behind addressing the action points.

PRESENT AN AGENDA

Advisers should outline what the Client can expect in terms of the areas to be covered, and an estimate of the timescale. It is good practice to check that the Client is happy to proceed on that basis. Some advisers use a checklist as a guide to the meeting, ticking off areas as they are completed. This gives both client and adviser some insight into how the meeting is progressing.

PRESENT THE PRODUCT ACCURATELY / SIMPLY

M The Adviser needs to cover all relevant points in the interview, as detailed below. The adviser should keep the explanations straightforward without distorting it or leaving out points which alter the meaning.

On the other hand, the adviser is not an actuary - it is important to get the essential details across as concisely as possible. The aim is to help the Client to understand how the product applies to their circumstances, how they will benefit and what the risks are so that they have sufficient information to make the educated decision.

He / she should be constantly aware of the client’s level of understanding, particularly over technical areas, and keep the presentation at a level that the client understands. Questions should be asked to ensure that the client understands what is being explained.

THE COMPANY CHOICE SHOULD ALWAYS BE JUSTIFIED

M Some form of explanation should be given as to the choice of lender/product provider. When client files are inspected, there must be evidence to show what research was done and how the choice of lender/provider was made. This has to be evidenced to the client verbally, in the presentation and afterwards in writing, in the form of the RWL.

ANSWER QUESTIONS

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This is something that advisers should be doing throughout the meeting but it is important that they answer the questions that the Client asks, not the ones that they think are being asked. It may be necessary to clarify the exact question before answering.

EXPLAIN ACCURATELY THE KEY FEATURES AND BENEFITS OF THE RECOMMENDATIONS

It is not necessary to go into fine detail about the product or to mention all of its benefits and features. However, the adviser needs to explain the features of the product that relate to the Client’s needs and preferences, and the benefits that these features will provide. Basically, the adviser should be sure that the Client does understand the product. All of the explanations must be given before the Client signs the application form.

PROVIDE KEY FEATURES / PERSONAL ILLUSTRATION / KFI BEFORE THE APPLICATION IS SIGNED

M The adviser must give the Client a copy of the pre-printed Key Features together with a Personal Illustration (for General Insurance) or the KFI (for mortgages) if the cient has not already received it. These must be explained to the client’s satisfaction, and copies given before the Client signs the application form. (For role-plays, a full explanation is required to demonstrate understanding)

EXPLAIN THE LONG-TERM NATURE OF THE PRODUCTS

The adviser should make the Client aware, where appropriate, of the long-term commitment they are making. They should know for how long the product is intended to run, and any redemption penalties that may apply.

ADEQUATELY EXPLAIN THE CHARGING STRUCTURE OF THE PRODUCT.

M The Adviser must ensure that the client fully understands all charges and costs associated with the product(s) being recommended.

DISPLAY NO PLAN BIAS

M Advisers will be displaying product bias if they try to pressure the Client away from an established need to a less important need (unless it is the client’s interest). This includes recommending a higher commission earning product where a more suitable lower commission paying product is available.

COMMISSION MUST ALWAYS BE DISCLOSED IN WRITING PRIOR TO MAKING THE SALE.

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The requirement is that commission must be disclosed to the client in writing. Where only the percentage of commission is quoted due to the firm, it is the Adviser’s duty to calculate the actual amount and disclose this figure to the client within the KFI. CLOSE THE SALE APPROPRIATELY

M The Adviser should obtain Client’s agreement to proceed without pressurising

There should be no undue psychological pressure (e.g. trying to make a Client feel guilty if they don’t sign). There should be no false statements to pressurise the Client into signing e.g. “I need to get this in tonight as the offer closes tomorrow” where no such constraint exists.

OBTAIN PERMISSION OR GIVE CLIENT THE OPPORTUNITY TO COMPLETE THE APPLICATION FORM

The adviser should not assume that he / she is to complete the application form. In most cases the Client will be happy for them to do so but they must offer the Client the opportunity to complete the form. “Would you like to fill out the form, or would you prefer me to do it?” is quite acceptable. If the adviser is given permission to complete the form it must be done in the Client’s presence.

ENSURE THAT THE APPLICATION FORM WAS FULLY COMPLETED

Whatever the situation, no part of the application form should be left incomplete for completion at another time or place. If some information is not available, it is acceptable to return at a later date and finish completing the application. The form must not be signed until all of the information has been entered.

MONEY LAUNDERING

M The Adviser should complete all required documentation including money laundering form where appropriate.

ENSURE CLIENT CHECKS DETAILS PRIOR TO SIGNING. It is not sufficient just to pass the application over for signing. The adviser must ask the Client to genuinely check that the details on the application are correct.

This is an opportunity to explain the need for full disclosure of all information (particularly medical information) by drawing the Client’s attention to the Declaration on the application form. The adviser should point out that failure to give full and correct information may mean a claim not being paid out in the future.

When the Client is happy that the information is correct, they should sign the form.

COOLING OFF / ADVISE CLIENT OF THEIR STATUTORY RIGHT TO CANCEL

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M The adviser must explain that a Statutory Notice will be received, which gives the right to cancel the arrangement within 14 days of the receipt of the Notice. Advisers must not attempt to influence the Client’s decision, for example, by suggesting the Client must contact them before sending the cancellation notice in.

REPLACED PLAN ARRANGEMENTS

M The adviser must make a record of reasons where a plan is being replaced or lapsed (if applicable)

This covers situations where a plan (e.g., term assurance is being re-broked) or situations where a client is surrendering one plan and replacing it with another, to give just two examples.

It is also the Adviser’s duty to ensure that the client is aware that any existing plans should not be cancelled until the new policy is in place.

CASH / CHEQUES

M The Adviser must understand the policy regarding non-acceptance of cash or cheques unless made payable to the lender. The rule is simple – neither are allowed

EXPLAIN THE NEXT STEPS

Where the outcome is a sale, the adviser needs to outline the stages in the process of submitting an application and give approximate time-scales, state when statutory notice will be received and inform that they will confirm the outcome detailing the advice within the reason why letter.

If the meeting has not resulted in a sale then the time and place of any future meetings should be agreed. The intention is to tie up any loose ends.

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Appendix F

File Quality Procedures

FILE QUALITY PROCEDURES Objective The objective of JHML’s & JHFC’s File Quality Department (FQD) is to verify the quality and standards of Regulated and Non-regulated Mortgage, Protection, General Insurance, Pension and Investment advice given by its Appointed Representative (AR) and adviser population. This is achieved by reviewing the sales documentation in accordance with the requirements of the Financial Services Authority, other regulatory bodies and JHML’s own internal standards, policies and procedures. It is the Advisers responsibility to ensure that the documentation submitted confirms “Best Advice” has been given. For example, if a mortgage sourcing document is submitted in alphabetical order it is not possible to establish if best advice has been given. The list must show the product being recommended and if not top of the sourcing document, the Suitability Report must clearly explain why all other more competitive lenders were discounted.

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Procedure All cases must be submitted to the network within 15 working days of an application being submitted to a Lender or Product Provider. If not received within this timescale a £20 late submission fee will be payable and the case will automatically be graded as “Unsuitable”. A completeness check is completed for every case submitted, irrespective of competency level, experience or risk. This check is completed by JH’s administration team using the completed sections of the various New Business Submission Sheets (NBSSs) available from the Intranet. An example of the Completeness & Compliance Checklist is shown in appendix 1. All files must pass the completeness check in order for the commission and / or proc fee to be paid to the adviser. Donna Harden - office manager and admin team leader’s decision here is final. Every authorised Appointed Representative (AR) or Advisers then has an appropriate number of files checked by Compliance on a monthly basis. The File Quality Department or FQD is responsible for file checking across JHML and JHFC. In addition the FQD also review the quality of the completeness checks undertaken by the admin team. Any training and development needs are fed back to Donna Harden. Completeness checks are an integral part of the compliance monitoring programme and the admin team must understand and appreciate this. For new advisers their first 10 cases must be checked by the FQD prior to the adviser being assessed for reduced checking levels. • once 80% or more of files checked have been Graded Suitable (including Unclear subsequently upgraded to Suitable) then checking will be reduced to 10% of files submitted • Where an adviser fails to reach the above standards they will remain on 100% file checking. Ongoing competence in this area is deemed to be a Suitable, or an Unclear Grade that is subsequently deemed Suitable on more than 80% of files reviewed on a rolling 4 month basis. Please note that these checking levels do not apply to high risk / monitored

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products – see Appendix 2. 100% of all product sales deemed to be monitored as high risk are reviewed as a matter of course. Files are selected for checking from the Weekly New Business Report .Where an adviser is not subject to 100% checking, the appropriate number of cases should be selected at random from the business written / new business report. Priority must be given to higher risk products. See Appendix 2.FQD personnel must use their skills, knowledge and experience to ensure that they focus their file selection and reviews according to perceived risk and the marketplace in which JHML and JHFC operate. FQD will use a File Review Form to check all cases reviewed – see Appendix 3 & 4. The File Review Form has a detailed checklist to assist checking and allows comments and notes to be made as well as an overall grade to be given. Cases are graded in accordance with grades and definitions outlined below. Results of files checked will be logged on the New Business Ledger and a compliance email produced, which is sent to the adviser attaching a copy of the File Review Form. All files graded Unclear or Unsuitable are recorded in the Compliance Memo Database. The advisers T&C Supervisor and the network’s Compliance Director are copied in on all File Review forms and feedback to track issues, patterns and risks to aid development and to discuss and record at 1 to 1 meetings. Where the remedial work is not fully completed within the appropriate timescales a chaser memo / email must be sent to the adviser concerned copying in the Compliance Director. Failure to complete any remedial work may lead to a suspension of the broker’s authorisation. This means that the adviser must cease all activity as an adviser representing this company until these issues have been resolved. This does not apply where an adviser has attempted remedial work but simply failed to address one or two of the points raised for example.

Chaser follow ups for remedial action to be completed are also logged centrally in the Compliance Memo database. This document must be checked regularly by a member of the FQD to ensure that remedial work is completed within appropriate timescales. Each member of FQD “owns” their own cases but where holiday and sickness applies another member of the FQD must ensure that remedial work is completed. FQD must maintain an Enhanced Checking Register. This lists all advisers

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that are subject to enhanced checking, the date they were placed on enhanced checking and the reasons why. This could be due to poor file grades or compliance but could also be triggered during recruitment or during their “Annual Fitness and Propriety” checks, if it is clear that the adviser is having financial difficulties or has entered into an arrangement with their creditors. The T & C Supervisors will be notified accordingly. If an adviser remains on the enhanced checking register for more than 6 months their authorization to remain as an adviser with JH Network will be reviewed. Grades On successful completion of a full check, each case reviewed will be graded. The grades are as follows: - SUITABLE UNCLEAR UNSUITABLE Grade Definitions SUITABLE The file is satisfactory and the suitability of the advice is clear and complete. The advice is sound and there are no material deficiencies in the file in respect of quality of advice or compliance with Financial Services Authority or Julian Harris’ own requirements. UNCLEAR It is unclear from the file whether or not “Best Advice” has been demonstrated. Some material deficiencies exist in the file, which need to be corrected if the appropriateness of the advice is to be proven. Once remedial work has been undertaken the file will be reassessed to confirm suitability. If it is deemed to be unsuitable then the following will apply. UNSUITABLE The evidence suggests that the advice is inappropriate or non-compliant and “Best Advice” cannot be established. There may also be breaches of Financial Services Authority rules as well as internal requirements such as missing documentation or a late submission (all cases must be submitted

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with 15 working days of an application being submitted to a Lender or Product Provider).Urgent remedial action is required. Required Actions SUITABLE There may be minor amendments / clarification required, but the file will not need to be re-submitted or re-checked. UNCLEAR The consultant must address all material issues raised within the “compliance file review”. Advisers must respond to the requested action within 5 working days initially with all remedial work fully completed and signed off as satisfactory by the FQD within 15 working days. The adviser’s T&C Supervisor will review comments, themes and concerns at the next 1 to 1 meeting. UNSUITABLE Urgent action is required to rectify the concerns and errors found. Where a case receives a Unsuitable grade, Advisers must respond to the requested action within 5 working days initially with all remedial work fully completed and signed off as satisfactory by the FQD within 15 working days. Senior management must be kept informed of progress in this area. The adviser’s T&C Supervisor will review comments, themes and concerns at the next 1 to1 meeting. If a case remains “Unsuitable” this will be treated as a customer complaint if they appear to have been disadvantaged and all material breaches will be reported to the to the FSA. If evidence of fraud or dishonest activity is suspected then the Lender or Product Provider, FSA and SOCA (Serious Organised Crime Agency) will be reported to as appropriate.

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Appendix 1

Completeness and Compliance Checklist

Mortgage Protection General Insurance

Adviser Name Checked By

Client Name(s) Date File Submitted

Completeness Check Date

Lender

Monthly Payment Mort Advance

Life Provider (Ap 1) / Joint Life Premium Sum Assured

Life Provider (Ap 2) IP/Gen Premium Sum Assured

Income Protection Provider Scheme Status

General Insurance Provider Product Type

Date Business Written High Risk Yes No

Submitted within time scale Yes No Fine Chargeable Yes No Commission to be withheld Yes No

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Completeness Check Yes No N/A

1) Mortgage/Protection/GI Submission Sheet

1.1 Appropriately completed

1.2 Correct order of dates: FF, Proposal, Quotes, SR

1.3 Using the most recent template

1.4 Policy over £500k (HIGH RISK)

1.5 Lending into retirement (HIGH RISK)

1.6 Policy re-written/re-broked (HIGH RISK)

1.7 Policy over premium threshold £100 (HIGH RISK)

2) Fact Find completed or addendum

3) TOB

4) Money Laundering form and copies of proof of ID and address

5) Fee Agreement completed and signed by client if appropriate

6) Suitability Report

7) Copy application form included in the file

8) TCF

9) Others

9.1 Enter client on New Business Ledger

9.2 Check for any pre-contract activity

Mortgage

10) Copy of application form

11) Trigold/Mortgage Comparison

12) KFI included in the file

12.1 If Interest Only has C & I KFI been enclosed

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13) Certified Proof of Income

14) Self Certification Statement

Protection

15) Copy of application form

16) Quotation

17) Basis of recommendation/Comparison tables/Independent

Survey

18) Signed CIC rebroking form

General

19) Copy of Application

20) Demands and Needs

21) Illustration

Comments/Action(s) Required Email for info only no action required Missing document(s) to be submitted

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Appendix 2 – High Risk Monitored Products The following products are deemed to be high risk and are therefore subject to 100% file checking / monitoring by the FQD All Pension Switches All Drawdown Business Investment Sales for Clients aged 70 and over Equity Release / Lifetime Mortgages Protection Premiums over £100pm Life Insurance Policies over £500,000 CIC policies over £500,000 Group Insurance Policies Business and Key Person Protection and policies Re-broked Critical Illness policies Mortgages that extend into retirement All self-cert mortgages Remortgages, which incorporates capital raising for Debt Consolidation

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Appendix 3 – File Review Form Mortgage & Protection

File Review Form

Adviser Name Client Name(s)

Date of Sale Date of submission

Checked by Grade Awarded

Date of check T & C Supervisor

GRADE DEFINITIONS

SUITABLE The file is satisfactory and the suitability of the advice is clear and complete. The advice is sound and there are no material deficiencies in the file in respect of quality of advice or compliance with the Financial Services Authority or Julian Harris own requirements.

UNCLEAR It is unclear from the file whether or not “Best Advice” has been demonstrated. Some material deficiencies exist in the file, which need to be corrected if the appropriateness of the advice is to be proven. Once remedial work has been undertaken the file will be reassessed to confirm suitability. If it is deemed to be unsuitable then the following will apply.

UNSUITABLE The evidence suggests that the advice is inappropriate or non‐compliant and “Best Advice” cannot be established. There may also be breaches of Financial Services Authority rules as well as internal requirements such as missing documentation or a late submission (all cases must be submitted with 15 working days of an application being submitted to a Lender or Product Provider).Urgent remedial action is required.

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REVIEW NOTES:- If remedial action is requested you must respond by the (Date)

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Suitable Advice Reference Guide

Yes/No/NA UNCLEAR

GENERAL All documentation received correctly. From submission sheet, is it clear that documentation has been issued in correct chronological order. E.g, has KFI been issued prior to submission of application.

All documentation received within timescales. Has the adviser used the correct version of the IDD/TOB. Has the fact find been completed fully and accurately. Has budget planner been fully completed and is it realistic. Is the disposable income sufficient to support the recommendations made. Is it clear where deposit is coming from when arranging a purchase (asset section). Are clients objectives clear. Are clients/adviser gradings completed if protection only Fact Find used. MORTGAGE Type of Mortgage Product (SVR, Fixed, Discounted, Tracker, Capped). Repayment Method (Interest Only, Repayment or Split). Are the client’s mortgage preferences accurately recorded and the reasons added as appropriate.

Is the client’s Attitude to Risk (ATR) accurately recorded and full information documented for the repayment of Interest Only mortgages whether full or part.

If Interest only or Split mortgage arranged has IO declaration been submitted with case.

Does the KFI/illustration provided to the client reflect their needs and contain the correct fees and disclosures (including any broker fees being charged).

If a broker fee has been charged, does this fall within the JH guidelines and match the disclosures made in the IDD.

Does the mortgage extend into retirement? Has affordability in retirement been demonstrated / proven? (HIGH RISK AREA).

Does proof of income supplied accurately reflect what has been disclosed in FF & application (gross & net monthly income).

PROTECTION If mortgage protection arranged does the policy recommended adequately cover the amount and term of the mortgage (including any existing policies being retained).

Does the life illustration reflect the identified needs and address them. If an existing CIC policy being replaced, has a CIC re-broking form been submitted with case.

Is the product(s) recommended consistent with the client’s ATR and is this clearly documented.

If Income protection arranged does the benefit amount and deferred period reflect the client’s circumstances & needs.

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GENERAL INSURANCE - Buildings & Contents/ASU. Does the illustration reflect the identified needs and address them. Are the proposed ASU benefits in line with clients employment status & mortgage arrangements.

SUITABILITY REPORT (mortgages) Is the correct template being used. Have clients circumstances been fully discussed in the opening objectives paragraph.

Have the reasons for recommending the new mortgage product been fully documented.

From sourcing table if cheapest product/provider not chosen has this been recorded (check sourcing filters used).

If interest only recommended has the client’s repayment strategy been fully documented and is it realistic.

If pure interest only recommended has a comparison been made between IO & C&I and the relevant mandatory paragraph been included.

If lending extends into retirement has affordability been proven and documented Has the recommended mortgage product been correctly documented (lender, mortgage amount and term, product term and type of product and rate

When reverting to SVR have the financial implications of this been discussed especially with regards to an increase in their outgoings and is this affordable.

If client is incurring a redemption penalty on their existing mortgage has this been justified in the SR.

If client is incurring a redemption penalty on their existing mortgage was consideration given to alternative options E.g. Further Advance or secured loan.

Has portability paragraph and future redemption penalties been included Have the reasons for recommending the mortgage lender been fully documented. If debt consolidating, has a KFI been issued showing the costs of the mortgage without the consolidated debt & correct mandatory paragraph been included.

If Self Certificated mortgage arranged has full justification been offered for this. If Adverse mortgage arranged has full justification been included. SUITABILITY REPORT (protection) Have clients protection needs been fully discussed in the opening objectives paragraph and existing arrangements clearly documented.

For each plan recommended have the details been accurately recorded (Provider, sole or joint, Level or decreasing, sum assured, term, guaranteed or reviewable premiums)

From sourcing table if cheapest product/provider not chosen has the product recommended been fully justified.

Have all other identified needs, where not addressed by the sale, been fully discussed and reasons given as to why client has chosen not to accept recommendations (as per advisor gradings documented in FF).

For each product sold has the chosen provider been fully justified. Rebroking – Where an existing policy is being replaced has a full justification been given. (HIGH RISK AREA)

Where an existing policy is being re-broked has this been fully justified and documented

Where CIC policy recommended have mandatory paragraphs been used. Have Wills been discussed and has the mandatory paragraph been used. Where family protection has been arranged on a single life basis has consideration

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been given to placing policy into trust and have the benefits been fully documentedIf arranging IRB does the deferred period tie in with any employee benefits. If arranging IRB has the maximum benefit associated with their income been recommended. If not has shortfall in cover been documented.

Where income protection arranged has mandatory paragraph been included. SUITABILITY REPORT (General Insurance) If arranging Building & Contents has this been fully documented including level of benefits.

If arranging ASU has this been fully documented including level of benefits. SUITABILITY REPORT (general) Have all the cost associated with arranging the mortgage been fully documented (val fee, arrangement/booking fee, broker fee, TT fee and Exit fee).

If the client is incurring a redemption penalty on their existing mortgage has this been included in the cost section.

Has proc fees and commission earned been fully documented. Has confirmation of initials costs been fully completed (deposit, mortgage and protection costs)

General Considerations – have the mandatory paragraphs (4) including adviser contact details been documented

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Appendix 4- IFA

File Review Form

Adviser Name File Reviewer Nicky Pilsbury

Client Name Date of Review

Date of Suitability Letter

Plan Type/Provider

Grade Awarded Please Note: Remedial letters etc must be submitted to your File Reviewer for approval prior to issue to the client and the approved copies must be added to the client file.

Remedial Action to be completed by:

GRADE DEFINITIONS

SUITABLE The file is satisfactory and the suitability of the advice is clear and complete. The advice is sound and there are no material deficiencies in the file in respect of quality of advice or compliance with the Financial Services Authority or Julian Harris own requirements.

UNCLEAR It is unclear from the file whether or not “Best Advice” has been demonstrated. Some material deficiencies exist in the file, which need to be corrected if the appropriateness of the advice is to be proven. Once remedial work has been undertaken the file will be reassessed to confirm suitability. If it is deemed to be unsuitable then the following will apply.

UNSUITABLE The evidence suggests that the advice is inappropriate or non‐compliant and “Best Advice” cannot be established. There may also be breaches of Financial Services Authority rules as well as internal requirements such as missing documentation or a late submission (all cases must be submitted with 15 working days of an application being submitted to a Lender or Product Provider).Urgent remedial action is required.

V3 03/11 Page 79

REVIEW NOTES / REMEDIAL ACTION REQUIRED:

V3 03/11 Page 80

REGULATORY DOCUMENTATION Y/N/NA

UNCLEAR

Have the correct versions of all current regulatory documents i.e. SCDD & Client Agreement, Business Card etc been given to client within the required timescale?

Signed Client Receipt on file?

Have Anti-Money Laundering procedures been fully adhered to?

Copies of verification documents placed on clients file?

Is Client participating in TCF Survey? If yes, copy of completed TCF Survey on file?

CLIENT FACTFIND

Y/N/NA UNCLEAR

Has a Client Factfind been fully completed and signed by the client?

Is the Client Factfind up to date and less than two years old? If more than 6 months old has

an Addendum to Factfind been completed and signed?

Is the client’s Attitude to Risk clearly recorded in the Client Factfind?

Is the client’s Attitude to Risk consistent with their circumstances, objectives and existing

investments?

GENERAL

Y/N/NA

UNCLEAR

Does the application form match with the advice and illustrations provided to the client?

Have the procedures in respect of ‘Insistent Clients’ been correctly followed

Have the procedures in respect of ‘Execution Only’ been correctly followed

Have the procedures for ‘elderly clients’ (i.e. age 70 plus) been correctly followed?

Was the advice considered the most suitable for the client’s circumstances? Does it meet the stated objectives and was it affordable?

V3 03/11 Page 81

SUITABILITY LETTER

Y/N/NA

UNCLEAR

Was the Suitability Letter issued within the allowable timescale?

Does the Suitability Report include a summary confirming the client’s overall financial situation, objectives and attitude to risk?

Is this summary an accurate and full reflection of the information recorded in the Client Factfind

Has a suitable ‘emergency fund’ been recommended i.e. a minimum of 3 x net monthly income or £5,000 if greater?

Has due consideration been given to paying off or reducing existing debts before recommending an investment product?

Have tax efficient savings/investment vehicles e.g. ISAs been considered first

Does the Suitability Letter clearly state why the selected product and the provider are considered most suitable for the client’s requirements?

Does the supporting research show the recommended provider is the most suitable available and justify why this particular product was selected in preference to another product?

Is the fund choice appropriate to the objectives, attitude to risk and the recommended asset allocation? Is evidence of fund research on file?

Is appropriate research contained within the file, including product / wrap / fund supermarket selection etc and fund research? Where analysis tools are used, is there appropriate evidence of research on file?

Is all additional / supplementary information referred to in the Suitability Letter included within the file? e.g. supporting Key Facts documents, personal illustrations, fund information etc.

Does the fund choice and asset allocation match the client’s attitude to risk? If not, why is it considered suitable? e.g. does the overall portfolio matches the attitude to risk

Is there clear evidence on the file that the client was given sufficient information about the risks involved?

Has the investment term been fully explained to the client? Is the investment term/policy term in line with the client’s requirements?

Is the premium/sum assured and term of the contract etc considered suitable and affordable?

Have the product charges been fully disclosed either in the Suitability Letter and/or by directing the client to the relevant section of the supporting documentation e.g. the illustration, Key Features etc?

V3 03/11 Page 82

Is there evidence that commission was clearly disclosed by making specific reference in monetary terms in the Suitability Letter and/or by directing the client to the relevant section of the supporting documentation e.g. the illustration, Key Features etc?

Have all appropriate Risk Warnings been given in the Suitability Letter?

Has consideration been given to the pensions switching aide memoire?

Is this evidenced on file?

Has the critical yield calculator been used? Is this evidenced on file?

Replacement Policies and investments: Does the Suitability Letter fully explain and justify the rationale behind the recommendation and contain sufficient information to allow the client to make a meaningful comparison between the existing plan and the new recommended plan and the associated charges? Have any Early Encashment Penalties been explained?

With Profit Policies: Does the Suitability Letter give details of any Market Value Reductions (MVRs) which may be applied?

Has insurable interest been clearly established and/or has consideration been given to the use of trusts?

Have existing policies/investments been taken into consideration?

Date post:	06-Mar-2018
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