GAD Review Letter & Capped Drawdown Letter
Paraplanner717
Member
Hi, I have been given the task of creating a template letter for 'GAD reviews' for our clients (for those who remain in Capped Drawdown). I'll be honest, I'm not entirely sure what is required to be stated to the client for this. If there is any guidance as to what needs to be provided to the client every year/3 years whilst they are in Capped Drawdown, that would be greatly appreciated.
Comments
This was my thinking - as it would effectively just follow the max income they could receive and the client would receive this information directly.
However, would we need any process to provide further clarification on their options upon each review. I found the following discussion:
"First, the activity of undertaking a drawdown review is an FCA ‘regulated activity’. Second, an adviser who gives advice to a client following a review of a capped drawdown contract, even if the advice is to change nothing, will be providing a personal recommendation, and as such be subject to advice rules.
Based on this fact, and the absence of specific rules around the review process, the drawdown review must be treated very much in the same way as the original recommendation to utilise a drawdown solution. So the requirements of COBS 9.3.3 would apply. In fact, as a personal recommendation is being made, the adviser should follow the full ‘assessing suitability’ requirements of COBS 9.2.
The fact that firms appear, for example, not to be considering annuities at all as part of the process, much less considering health based annuities, would seem to breach these requirements in many cases. "
So was just wondering if there was any thought on what such a review/discussion of options should be inclusive of and detail to the client.
I think you are at cross purposes, the GAD review is just a reassessment of maximum income allowed, it may not even coincide with the drawdown review.
The drawdown review is essentially an advice point going over whether it is still suitable. It's essentially going over all the initial advice stuff again and making sure the product is still suitable. the income level is still appropriate, they still have ATR and CFL for drawdown etc etc