FSA checks firms on conflicts of interest over platform stakes
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The FSA is scrutinising how firms manage conflicts of interest where they own a stake in the platform they use.
The FSA highlighted the issue in its consultation paper on the platform market, published last week.
The FSA says: “In line with the position set out under the RDR, we recognise that there are a number of valid concerns with regard to ownership issues of advisers.
“We expect firms to take steps to manage this conflict and this will be an area we will continue to monitor closely as part of the supervisory work undertaken in the run-up to and post-implementation of the RDR.”
Speaking to Money Marketing, FSA head of investment policy Peter Smith says: “One of the things we see is that firms often believe that because they have identified the conflicts of interest, that is enough. It is not enough. Advisers have to manage that conflict of interest as well.”
The regulator first raised concerns over how advisers using platforms disclose conflicts of interests when it fined Moneywise IFA £19,600 in September for investment advice failings.
The final notice issued to Moneywise IFA stated that the firm had failed to manage conflicts of interest effectively bec-ause non-executive director Malcolm Coury had also set up Ascentric, the platform that Moneywise was recommending to clients.
Nucleus chief executive David Ferguson says he is confident that Nucleus advisers are managing potential conflicts of interest.
He says: “I do not know of any Nucleus IFAs that are not completely up front about the fact they own shares in the platform. There is always an assumption when you talk about shareholdings that it is to do with greed but that completely ignores the responsibility that comes with that shareholding.”
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