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File checks are often viewed as a compliance tick box exercise, something to evidence oversight and satisfy regulatory requirements. But when they’re done well, they are one of the most effective tools a financial advice firm has to protect clients, support advisers, and reduce regulatory risk.
When the FCA conducts supervisory visits or thematic reviews, file reviews are a key part of how they assess a firm. Importantly, they are not simply checking that documents are present. They are assessing the quality of advice, the suitability of recommendations, and whether the firm is delivering good client outcomes in line with Consumer Duty.
Strong file checking is therefore about much more than paperwork. It is about demonstrating that your firm has meaningful oversight of advice standards and adviser competence.
The FCA uses file reviews to understand how advice is delivered in practice. Through files, they can see:
The FCA’s Investment Advice Assessment Tool (IAAT) provides a useful insight into how regulators assess advice quality. Firms can use this as a benchmark when designing or reviewing their own file checking approach to ensure it reflects regulatory expectations.
There is no specific rule in the FCA Handbook that states how many file checks must be completed. Instead, firms are expected to take a risk-based approach.
For example, new advisers or those working towards competency sign-off will often require a high level of oversight, which may include checking 100% of their files before advice is issued. While this can feel intensive, it significantly reduces the risk of consumer harm and helps advisers build good habits from the outset.
For experienced advisers, file checking levels should reflect what is documented in the firm’s T&C plan. If the plan states that 10% of new business is reviewed each quarter, regulators will expect to see clear evidence that this is happening in practice. This should be treated as a minimum, with flexibility to increase checks where there are complaints, competence concerns, or higher-risk cases.
The key question the FCA will ask is not “what percentage do you check?” but “is your level of checking appropriate to the level of risk?”
Both pre-sale and post-sale file checks have an important role to play.
Pre-sale checks are particularly valuable for higher-risk advice, vulnerable clients, or less experienced advisers. They allow firms to prevent issues before advice is issued, reducing the risk of poor outcomes and complaints.
Post-sale checks are equally important for identifying trends, assessing overall advice quality, and improving internal processes over time. They provide a broader view of how advice is being delivered across the firm.
A sensible blend of both demonstrates strong oversight and a proactive approach to risk management.
Not all advice carries the same level of risk, so file checks should be proportionate. Higher-risk advice such as DB pension transfers or VCT investments will typically require more frequent and often pre-sale review.
That being said, lower-risk advice should not be ignored. Over time, all advice types should be reviewed to ensure consistency of standards across the firm.
It can also be helpful for file selection to be made independently, for example from the New Business Register (NBR) or by a third party. Advisers are naturally inclined to submit their best work, but it is often the less-polished files that provide the most valuable insight.
File checks only add real value when firms act on what they find.
Findings should be clearly documented, trends identified, and appropriate action taken. This might include additional training, closer supervision, changes to processes, or updates to documentation.
Maintaining a remedial action log provides a clear audit trail and demonstrates to the FCA that the firm not only identifies issues but actively works to improve adviser competence and client outcomes.
When approached in a risk-based and outcome-focused way, file checks become a tool for continuous improvement rather than a compliance burden. They help firms meet FCA expectations, support advisers effectively, and reduce the likelihood of complaints or regulatory issues.
If you are unsure whether your current file checking approach would stand up to FCA scrutiny, you need support carrying out reviews or strengthening your T&C scheme, we’re here to help.
Our friendly compliance team works with financial advice firms to design and deliver practical, FCA-aligned file checking frameworks. Click say hi to book a chat with us today!
