Dante De Gori

The FPA has released a new guidance on file notes to better help its members manage record keeping, in response to consumer complaints that highlighted gaps in records.

The new guidance provides innovative ways for financial planners to create file notes, including a number of apps that can capture client communications using video or audio recording and convert it to text such as OneNote, Notability and Evernote.

Well-documented record keeping is crucial in giving financial planners the evidence they need in litigation cases or if they are the subject of a complaint to the Australian Financial Complaints Authority (AFCA).

While financial planners make up just 1.3 per cent of AFCA complaints, the bulk of these disputes – around issues such as what advice was provided, or whether instructions were followed – involve incomplete record keeping ^[1].

The FPA Professional Standards and Conduct Committee identified a gap in proper record keeping in file notes as an area for improvement for the profession based on recent work with AFCA and recent case determinations.

“Through our work with AFCA, the importance of keeping meticulous file notes was identified as an area for improvement for financial planners,” FPA CEO Dante De Gori CFP® said.

“In reviewing AFCA reports and case law, detailed file notes were one of the biggest factors which helps in defending financial planners. Unfortunately, in a dispute, the file is going to be the enduring evidence of the financial advice a planner has provided. It needs to tell the whole story,” said Mr De Gori.

File notes allow planners to paint a better ‘picture’ of their client. For example, by recording client concerns emotions and/or issue(s) drawn to the planner’s attention during a meeting. They can also provide planners with crucial supporting documents in complaint hearings.

In one case, it was revealed that the content of the file note was found to be more persuasive than the client’s unsupported recollection of a discussion.

Another case revealed that the file note created by a financial planner proved that their conduct was consistent with the appropriate professional standards and that the appropriate advice was given to the client.

AFCA’s Chief Ombudsmen, David Locke, said record keeping and communication were key to avoiding complaints, as well as addressing them.

“Documents created at the same time as the activity or advice in question are usually given more weight than later recollections of what was said or done,” Mr Locke noted.

“This means contemporaneous file notes of conversations and actions are solid gold when a dispute comes to us.”

Mr De Gori said: “File notes no longer need to be paper-based. There are new and more efficient ways for financial planners to build a proper audit trail through effective record keeping.

“This not only gives greater clarity around why decisions are made but could be used when supporting evidence is needed,” he concludes.

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[1] COVID-19 complaints snapshot, 2021, AFCA, accessed 13 April 2021, https://www.afca.org.au/news/statistics

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