What's in a word? 

All over the UK, intermediaries, product-providers and compliance consultants are scratching their heads over the exact meaning over the words used in the FCA's new COBS 9A section, written to help implement the MiFID II regulations in relation to such matters as documenting suitability to clients.  ValidPathers will already know that we have provided an extensive digest on the significance of COBS 9A, but it is nevertheless the case that sufficient ambiguity resides within the terminology to baffle most of us.  The fact that IFAs wrestle with these ambiguities is, I think, a persuasive evidence of the professionalism and degree of care that individuals bring to their vocation - where terminological inexactitudes are prevalent, we want to introduce clarity in order to ensure that we are abiding by the spirit as much as the letter of the law.

The word we are focusing on in the FCA guidance in relation to the ongoing review service provided by intermediaries is the word "periodic", found in the following extract:

"Firms providing investment advice must agree with a client whether a periodic assessment of suitability will be performed. If periodic assessment is to be performed it must be at least annually and the continued suitability confirmed in writing."

We call them 'client reviews', but the FCA calls them 'periodic assessments' - but we are thinking that there may be a legitimate difference here.  Just because an IFA supplies some kind of review service, does that necessarily mean that such a review has to be 'periodic'?  The Oxford English Dictionary states that this word means "Appearing or occurring at intervals".  The Macmillan Dictionary states that it means "happening regularly, but not frequently".  The Free Dictionary says that the word means "Having or marked by repeated cycles".  All these definitions bring out differing emphases, but my conclusion would be that a specific annual  review would fall within the definition, as might a six-monthly review - but anything more often than this would fall foul of the Macmillan Dictionary's constraint of "not frequently".  And then, if you reduce the frequency still further by extending the time period between reviews, it becomes increasingly possible to argue that what the intermediary firm is offering is not, actually a 'periodic assessment'.  It could be 'ad-hoc', or 'as needed'.

But, hey, what benefit to anyone is it when it comes to quibbling about the definition and use of a word like "periodic"?  Wouldn't it be great to have guidance crafted in such a way that it was actually possible to relate it to our actual clients, and the actual service we are endeavouring to supply to them?  Whilst ValidPath are continuing to discuss such matters with both the FCA and product-providers, we have actually, in the meantime, created a new page of guidance to attempt to help Members with this particular conundrum - but please expect some improvements in clarity over time.

Kevin Moss, 01/12/2017