Advisers warned to watch what they write
Advisers need to be careful what they write on client file notes or they could find themselves in an awkward situation if their clients end up reading them, a lawyer says.
Tuesday, November 13th 2012, 7:37AM 20 Comments
by Niko Kloeten
Keeping adequate notes is important for advisers looking to avoid getting on the wrong side of the Financial Markets Authority, which has identified this aspect as one Authorised Financial Advisers (AFAs) can improve on.
But according to Kensington Swan partner David Ireland, advisers also need to ensure they don’t “doodle” anything on their notes that could come back to haunt them.
For instance, he said advisers should avoid writing derogatory remarks about clients on their notes because these notes could potentially be “discovered” (made available to the other party) in the event of a court case.
“The rules of discovery are fairly complex; there’s no hard and fast rule other than never write anything on a client file that you would have reservations about the client seeing,” he said.
“There are instances of that exact thing being used against the person writing the notes, often in an employment law context but quite a similar analysis. There’s often an indication of bias or pre-judgment, that type of thing.”
But advisers don’t even need to end up in court for clients to find out what they’ve written about them; Ireland said clients can request their files under the Privacy Act.
“There are very limited conditions in which they can’t access the whole file. If you’ve got personal information about somebody they’ve got the right to access it.”
Ireland said these sorts of comments, if discovered, could also land advisers in hot water with the disciplinary committee.
“Assume it’s going to be discovered… it’s a terrible way to live your life but equally you never know what’s going to happen around the corner.
“It’s a balancing act; you don’t want to unduly limit what you record because that in itself is going to get you into strife.”
Niko Kloeten can be contacted at email@example.com
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