Can there ever be a standardised, digital Letter of Authority?

by | Aug 3, 2022

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Anthony Rafferty, CEO Origo

By Anthony Rafferty, CEO, Origo

The business case for a standardised, digital Letter of Authority is indisputable – it simply makes sense for providers, platforms, financial advice firms and, most importantly, for consumers.

In its recently published Consumer Duty policy paper, the FCA made clear it wants the industry participants to “put themselves in customers’ shoes”. You can see why. When designing or reviewing a product or service, if we ask ourselves ‘how would I feel if I had to buy/experience this product, service or process?’ we might see a need to make a few tweaks or changes. Looking at things from a consumer’s point of view is good customer service and makes good business sense. It often marks out the most successful companies in any industry, because they understand what their customers want.

The Letter of Authority (LoA) process, the way a client authorises their adviser to work on their behalf with every product provider or platform handling their investments and savings, has developed organically over the years and at an industry level is disconnected with every provider having their own forms and way of working, is predominantly manual and consequently, inefficient, expensive and slow.

 
 

Unfortunately, also, after all the hard work by advice firms to attract and win the new client, it is the client’s first experience of the advice process. It’s not a great advert for our industry.

From the advice firm’s point of view, often it requires multiple forms to be completed and signed by the client, posting faxing or emailing the forms (sometimes all three, depending on the preferred method of the provider) and waiting for a reply – with no way of knowing where the form is in each of the provider/platforms’ systems, other than ringing the provider for an update. Meanwhile, client expectations of a fast, efficient, online service – such as they now get from their banks and Amazon – have to be carefully managed.

From the providers’ point of view the current method of handling LoA’s is a manual, slow, resource and time expensive process.

 

In a nutshell, the legacy system benefits no one.

So, what’s the business case for a standardised, digital system? First, to do away with all the bottlenecks and inefficiencies outlined above.

NextWealth research into this area revealed that it is “technically possible to onboard a new client to a financial advice firm within 48 hours of initial contact.”

 

That would be great service to the client and is a level of service clients have become accustomed to outside of financial services.

Using a standardised, digital Letter of Authority system, all requests can be submitted in a templated format, housed in one place for each provider/platform, and receipt of the form acknowledged automatically. The request can then be prioritised and allocated internally, and a set response time sent to the advisers, as well as tracking enabled, helping advisers to manage client expectations, and saving the follow up calls. In addition, going digital provides a higher level of security and GDPR compliance.

In a world where we handle most, if not all, of our finances online, why should Letters of Authority be any different? They shouldn’t be.

 

Origo has over 30 years of working collaboratively with the industry on market-wide solutions which have had significant impact on efficiency, cost effectiveness and customer service – our Transfer Service, Unipass Identity, Origo Integration Hub as examples. We know that no matter how beneficial a solution clearly is, every business must make the internal case to do the work to implement the new process – when assessed against all the other demands on resource and budget.

We know that in delivering a  common, efficient method of submitting and managing Letters of Authority for advice firms, platforms and providers, Unipass Letter of Authority will deliver significant benefits for the industry and can greatly help to improve the overall service and experience for consumers.

Currently, we are working with providers and platforms to bring them on digitally or to incorporate their current forms into the process, to help speed up the experience for advisers and their clients.

 

But ultimately, the business case for a standardised, digital Letter of Authority is indisputable, and we will continue to work with the industry to help make it happen.

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