The FSCA recently published FSCA Communication 46 of 2020 on the use of pre-populated records of advice. The practice in the industry of using prepopulated records of advice for replacements have proved, in various instances, to contain incorrect advice based on factual errors. Such errors result in advice being provided on incorrect comparisons of policy wording, fees, benefits, and exclusions.
The FSCA reminds the industry that the purpose of a record of advice in respect of a replacement product is to provide a client with a detailed, factual, and accurate comparison of the existing product, with the proposed replacement product(s). It is therefore imperative that the information contained therein is accurate and that the client can rely on it.
Masthead has raised concerns with the FSCA about the practice of pre-populated records of advice in the industry, particularly where Product Providers are pre-populating the Replacement Advice Record for advisors by comparing their own products with other insurer’s products. Where the prepopulated information of the ‘other’ insurer is incorrect, this leaves the advisor with the advice risk, even if the error was populated by the ‘replacing’ insurer.
The publication warns advisors to ensure that if they make use of pre-populated Records of Advice supplied to them by other sources (such as Product Providers) that they confirm for themselves that the information contained on the record of advice is correct. If a client makes a decision based on such incorrect information, the advisor may be held responsible for any damages that the client may suffer as a result of this decision. Advisors are urged to confirm the accuracy of all information on prepopulated records before they use it to provide recommendations to clients. Where inaccurate or insufficient information on prepopulated records is discovered, it remains the advisor’s responsibility to correct it accordingly.