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FSA reveals extent of firms’ failings in platform review

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The FSA has revealed that every firm it visited as part of its platform thematic review did not have the appropriate systems and controls in place.

Speaking at the launch of Aifa’s platform due diligence guide in London today in association with Standard Life, Rory Percival, from the FSA’s conduct risk division, said the issue of systems and controls was one of the biggest concerns to emerge from the regulator’s thematic review in March.

As part of the review the FSA carried out a desk-based analysis of 33 firms advising clients to invest through platforms, with 12 chosen for detailed assessments.

Percival said that out of the 12 firms visited, every firm had insufficient systems and controls in place to some extent.

He said: “Where a firm has decided to change its business model, firms clearly need to look at how their business is developing, what different risks and concerns could arise from that, and ensure that their oversight arrangements and control arrangements are up to date.

“This is a particularly concerning area because when we did our thematic review earlier this year of the firms that we visited, to a greater or lesser extent, this was a failing with every single firm.

“I don’t think it’s an area that’s necessarily been discussed or considered sufficiently within the industry to date.”

Percival confirmed that Moneywise IFA, which has been fined £19,600 for platform advice compliance failings, was referred to the FSA’s enforcement division following the thematic review.

Moneywise was the only firm to be referred to enforcement, although two other firms were also required to carry out a past business review.

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Readers' comments (26)

  • So how come these firms are still allowed to remain in business? How can the FSA be confident that investors are being appropriately sold platform based products

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  • So, 100% of firms failed and its all the firms fault.

    Imagine 100% of pupils failed their A levels in one school, it would be put down to teacher incompetance.

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  • I wonder what it is they actually want.

    Could an IFA be investigated/fined/beheaded for placing investments through, say Cofunds, whilst another IFA placing the same investments direct with the investment houses would be fine.

    Despite the fact that the end product and charge to the client is identical. The only difference is that Cofunds allows you to value, track and switch the investments quickly and efficiently.

    Possibly the FSA should be investigating IFA's that are not using platforms rather than making life difficult for those that are.

    When will the FSA realise that no matter how hard they regulate they will only achieve perfection when the last adviser goes out of business. Time for some pragmatism I think.

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  • If "every firm" the FSA visited did not have the appropriate systems and controls in place,then this must be down to the lack of clarity from the FSA.
    Maybe if the FSA weren't so bad at doing their job properly, then they could start looking at why are they so ineffectual in giving clear guidelines

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  • I don't understand this. Platforms need to be seen in their correct context, which is as administration companies. They are not product providers, they are gateways to access many providers with minimum administration as well as cheap inter-provider switching costs.

    When seen in this light then surely if the cost of going via a platform is the same to the client as going to each fund manager directly then platforms should be seen an inherently better every time - particularly with additional features such as online information access for clients which would othewise not be possible without the IFA buying their own systems for this.

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  • Mr Smug is right.
    What are they looking for? All a platform is a portal to trade through.
    Which ever way you transact its about the advise , cost and service..........recording what the client needs, requires and elects to do.

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  • Could someone please forward this farce to the prime minister with a request to immediately disband the world's most incompetent regime - The FSA !

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  • So "every firm" visited to lacked appropiate systems & controls. Looks like a ruse to generate more fines to plug their ever growing payrole costs and massive accounts deficit.
    Did the FSA staff conducting the review have any financial services qualifications. The one I spoke with had a degree in geography......Platforms now, what next???

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  • perhaps rather than continually put firms down, would it not be more helpful is the FSA actually helped the IFA and explained the rational behind the failure.

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  • What a farce. There more to this than meets the eye but are IFAs purely system controllers or are we supposed to be advising clients? What can be the difference in placing business direct with a provider when compared to a platform. It is all the same process except perhaps for Due Diligence. This is easy with so few and means greater administration efficiency, meaning less complaints about providers, easier paperwork for both client and business as well no bias towards funds, high paying commission products and lower costs and charges passed on to the client. Pot calling Kettle I say after the Keydata debacle, who incidentally are advisers not providers and who should have been fully checked out by the FSA when they appliced for their licence to advise. They really do appear to be from Planet Mars on this one when there appears to have been no complaints and no financial loss to clients. What a whopping fine for something that appears to have caused on ill affect.

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