For Consumer Duty file checks, a mortgage broker should keep enough on each file to show what it knew about the client, why the advice was suitable, what the client paid and why, how the client was helped to understand it, and how any vulnerability was handled. MCOB 4.7A.25R sets the minimum suitability record, and the FCA's guidance FG22/5 expects firms to be able to evidence the outcomes their customers receive.
Two layers of obligation
The first layer is MCOB. Under MCOB 4.7A.25R a firm must keep a record of the customer information it relied on and of why it concluded the advice was suitable, and, where it applies, why it did not recommend a cheaper suitable mortgage. MCOB Schedule 1 gives the retention period as three years from when the advice was given.
The second layer is the Consumer Duty, set out in Principle 12 and PRIN 2A of the FCA Handbook, and explained in the FCA's guidance FG22/5. FG22/5 says "a key part of the Duty is that firms assess, test, understand and are able to evidence the outcomes their customers are receiving" (paragraph 11.1). It also says there is no prescribed format, but that firms should keep records they can provide on request, and records of the issues they find and the action they take (paragraphs 11.26 and 11.27). The Duty applies across the distribution chain, from origination "through to distribution and post-sale activities" (paragraph 2.12), so it reaches the adviser as well as the lender.
What to keep, outcome by outcome
FG22/5 names four outcomes: products and services, price and value, consumer understanding, and consumer support. Arranging the file check around them makes it easier to roll file findings up into the firm's monitoring.
Products and services
- The fact find as it stood when the advice was given, with the date and the documents behind the key figures.
- The client's needs, objectives and priorities, in their own words where possible.
- The research: which products were considered and why the recommended one was chosen.
- The suitability letter or report, and the reason it fits this client rather than a generic one.
- Where relevant, why a cheaper suitable mortgage was not recommended.
Price and value
- Every fee the client paid, when it was disclosed and when it was paid.
- Any decision to add fees to the loan, and the reason.
- How the firm is paid on the case, as disclosed to the client.
Consumer understanding
- What the client was sent, when, and in what form, including the illustration and the suitability letter.
- How the key risks and trade-offs were explained, such as an early repayment charge or a term into retirement.
- Any adjustment made for a client who needed information differently.
Consumer support
- The record of contact through the case: requests, chasers and replies.
- Any complaint or expression of dissatisfaction, and what happened.
- What the client was told about the end of the product's initial rate or the next review.
Vulnerability
FG22/5 says the FCA's guidance on vulnerable customers, FG21/1, remains relevant. FG21/1 describes four key drivers of vulnerability: health, life events, resilience and capability. It says firms should record information about a customer's needs so that staff can act on it later (paragraph 3.17). On the file, keep what was identified, what the firm did about it, and how the outcome was checked. In our view the file should also show when the question was asked and nothing was found, because a blank cannot be told apart from a question nobody asked.
Running the file check
- Pick the sample deliberately: a spread of advisers and case types, plus every case with a complaint or a vulnerability marker.
- Check each file against the same checklist, so results can be compared across advisers and over time.
- Record each finding, its cause, and the action taken, as FG22/5 paragraph 11.27 expects.
- Go back to the adviser and, where the client may have been affected, to the client.
- Roll the findings up into the firm's outcome monitoring.
The FCA's review "Consumer Duty board reports: good practice and areas for improvement" (December 2024) says PRIN 2A.8 requires firms to report the results of their outcome monitoring to their governing body, which must review and approve the report at least annually. File checks are one of the most direct sources of that evidence for an advice firm, but only if their findings and actions are written down.
Common gaps
- A suitability letter whose reasons would fit any client.
- Fees recorded as an amount with no record of when they were disclosed.
- A fact find edited after the advice, with no way to tell which version the advice relied on.
- Vulnerability fields left blank rather than answered.
- File-check findings with no record of what was done about them.
See how Crestwell drafts the file and keeps the source behind each value. Crestwell Autopilot.