One of the strongest messages from an FCA review is the importance of being able to clearly evidence the decision-making process behind debt consolidation recommendations. It is not enough to simply state that alternatives were discussed; firms must be able to demonstrate how and why those alternatives were considered and discounted.
Advisers should take a structured approach to alternative options, ensuring that they are actively explored rather than briefly acknowledged. This includes considering whether the customer could manage their debts through existing arrangements, renegotiation with creditors, or other non-mortgage solutions. The file should clearly show that these options were genuinely assessed in light of the customer’s circumstances.
A further key point is ensuring that sufficient information has been gathered to properly assess those alternatives. Without accurate details such as interest rates, repayment terms, and any early repayment charges, it becomes difficult to evidence that consolidation is genuinely the most appropriate option available.
Strong file notes should clearly reflect the journey from options to recommendation. This includes documenting the alternatives considered, why they were not suitable, and how the final recommendation aligns with the customer’s objectives. Done well, this creates a clear narrative that supports both regulatory compliance and good customer understanding.
