RDR: FSA to crack down on platform advice
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The FSA has pledged to take tough action against advisers who inadequately assess the suitability of platforms for their clients after a review uncovered poor practice.
This review looked at whether firms that advise customers to invest through platforms give suitable advice and have adequate systems and controls to support that advice.
In its discussion paper today, Platforms: Delivering the RDR, the FSA says: “We found evidence of poor practice in all the key risk areas assessed. And while
results varied, the high incidence of failings at certain firms underlined the need for vigilance, particularly as use of platforms is set to increase still further.”
It says the main reason for unsuitable advice was inadequately considering the overall ‘solution’, including the combined cost of funds, products, platform and advice.
The review also found evidence of weak systems and controls at many firms within the sample, highlighting the need for adviser firms to review and implement strong oversight and management functions when introducing platforms into their business model.
The FSA says: “In light of the risks to customers and unacceptable practices identified, platforms advice will form a supervisory priority in the future.
“And where we find unsuitable advice and weak systems and controls we will take tough regulatory action.”
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