ECF Comments and query resolution ECF Best Practice Group (July 08) LMAs ECFUG & LMBCs BEFIT

Aim and Content Illustrate some of the issues associated with ECF response types Identify potential best practice going forward Content of this presentation –Highlight the problems –Overview of the current process –Proposed best practice –Identify at least one residual issue –Summarise best practice

Outline of the problem There is a divorce between the system response (ie the buttons) and the often more comprehensive and explicit written response, as contained within the Public Comments –Further confusion arises due to differences between IUA and Lloyds versions of CLASS –A perception (within some MAs) that Public Comments are being ignored –Confusion as to how queries should be actioned/ resolved –Growing volumes of queried items, which has the potential to become a serious problem for the market as a whole

Outline of the problem The most appropriate system response (Seen/Action; Agree Pay or Query/Return) depends upon a number of factors: –The merits of the claim, the accuracy of the supporting TR plus the nature of the Public Comments made –Nature of the CLASS TR (whether an advice or a settlement) –Whether claim is Coupled or De-coupled –Whether it is the lead, or a subsequent agreement party that queries the claim.

The process (Coupled) Broker loads TR Leader agrees TR XCS agrees TR XCS produces SCM Essentially the same CLASS data flows through the whole process

The process (Coupled) Broker loads TR Leader queries TR Leader Queries the TR

The process (Coupled) Broker loads TR Broker amends TR or loads additional documents Leader either agrees TR or re-states query Process then goes onto complete as applicable. Leader Queries the TR and Broker amends TR

The process (Coupled) Broker loads TR Leader queries TR Leader Queries the TR

The process (Coupled) Broker loads TR Leader either agrees TR or re-states query Process then goes onto complete as applicable. Leader Queries the TR and Broker deletes original TR Broker may delete original TR and replace with a new one If the broker deletes the original TR (as a consequence of the query resolution) it is vital that they copy any agreement party comments within the Public Comments, to the IMR. This is due to them also being deleted, along with the TR! per the Systems Process & Procedure manual.

The process (Coupled) Broker loads TR Leader agrees TR XCS queries the TR XCS Queries the TR

The process (Coupled) XCS Queries the TR and broker amends the TR Broker loads TR Broker amends the original TR; deletes it and replaces it with a new one, and/or loads additional documents XCS either agrees, or re- queries the TR Process then either repeats or, goes onto complete as applicable. Leader needs to re-agree the TR. It would be useful for the broker to detail, in the narrative, the changes made.

The process (De-coupled) All claims (where the 1 st advice post-dates May 07) are now de-coupled The process is exactly the same as for coupled claims, however (as the ECF CLASS data does not automatically flow into the SCM) there is one further scenario, where both the leader and XCS can query a claim, yet an SCM can still be produced

The process (De-coupled) Broker loads TR Leader queries TR XCS also queries the TR Yet XCS can produce an SCM An amendable copy of the original CLASS data flows through to the SCM De-coupled

Further detail of the problem Should the broker always create a new TR, to answer a query? –Not necessarily so (duplication of effort for all) –Suggest minor amendments to SP&P (section & ) –Simply adding an , or document to the IMR may resolve the query Should the broker amend or delete the TR? –Depends on the nature of the query and what is wrong with the original TR –Depends upon what course of action the broker and the agreement party that raises the query, decide upon –Focus should be upon getting the CLASS data right 1 st time Always pay attention to the Public Comments –The ECF file often gives no clue that our prior comments have been actioned/ addressed

Proposed change to SP&P Section currently reads: --- brokers must not load documents and assign them to a TR on which the Lead Agreement Party has already added a response. All documents loaded after a Lead Agreement Party has added a response must be assigned to a new or replacement TR unless responding to a Query/Return response made by the Lead Agreement Party

Proposed change to SP&P Suggest reword as: When an Agreement Party enters a response of Seen/Action; Agree Pay or Query/Return the broker must act upon that query, and/or supply all new documentation. The broker may load the additional documents to the IMR under the same transaction.However there will be no automatic notification to the Agreement Party who raised the query and the broker must therefore advise the Agreement Party of the new documents via means outside of ECF (e.g. telephone, ,etc. This agreement party will decide whether an amended or replacement transaction is required.

Proposed best practice This complex and confusing issue can be assisted by: –Endeavouring to query the TR, only when the CLASS data is incorrect (as opposed where there is a concern over the claim). –If the TR is a settlement, Query/Return may be the only option –Both the broker and the agreement party should look to resolve any query asap and via the most appropriate method. Options include: Phone (that can then be added to the IMR by broker or lead agreement party) Amending the existing TR (or even deleting and replacing) Additional CLASS TR, if warranted –Would be helpful to amend the broker narrative, to enable the agreement party to see how the TR has been amended Responsibility for ensuring that the query gets resolved lies with: –a) Primarily the broker, to action the comments made within the Public Comments (regardless of the system response) –b) The agreement party that raises the query

Residual Issues As the volume of queried items grows, we will see two things: a) Innaccurate statistics of unactioned items b) More claims becoming Revert to Paper. This due to the fact that a queried TR may jam responses to later TRs (unless the original query can be lifted). See example that follows

Residual Issues

1st TR loaded, then subsequently queried on March 12th.

Residual Issues 1st TR loaded, then subsequently queried on March 12th. No further TRs can be responded to, till the query on TR001 is removed The 15 line limitation on text within the Public Comments may be insufficient to facilitate the query and resolution

SummaryBest Practice Query the TR when the CLASS data is incorrect (as opposed where there is a concern over the claim). If the TR is a settlement? (Query may be the only option). Both the broker and the agreement party should look to resolve any query asap and via the most appropriate method. Options include: –Phone – (that can then be added to the IMR by broker or lead agreement party) –Amending the existing TR (or even deleting and replacing) –Additional CLASS TR, if warranted Would be helpful to amend the broker narrative, to enable the agreement party to see how the TR has been amended Responsibility for ensuring that the query gets resolved lies with: –a) Primarily the broker, to action the comments made within the Public Comments (regardless of the system response) –b) The agreement party that raises the query