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FCA decides against historic data as risky product collection begins

FCA logo glass 620x430The regulator will not ask advisers for historic data relating to advice given on unregulated investments, it has confirmed.

That is despite advisers calling for the FCA to request historic information in firms’ annual Gabriel returns.

As part of its review of the Financial Services Compensation Scheme’s fund­ing model, the FCA said it would incorporate a new question into Gabriel returns asking advisers to supply data on the number of ‘non-mainstream pooled investments’ they had advised on in the previous year. The move was part of a proposal to introduce risk-based FSCS levies, which would be related to the type of business adviser firms carried out.

FCA analysis revealed around a third of all FSCS claims in the three years to 2016 were linked to the sale of non-mainstream pooled investments.

A number of industry commentators said firms should have to provide historic information as part of the returns, dating back up to five years. They argue that, as it often takes years for problems to come to light, assessing a risk-based levy based on just one previous year’s data would be ineffective.

Wingate Financial Planning chartered financial planner Alistair Cunningham says: “The risk on these investments goes back longer than 12 months; it can take years for losses to emerge. So it would be prudent to ask for details dating further back than last year.”

The FCA has decided asking for historic sales data would not be appropriate, however, adding that many firms are unlikely to possess the information.

In the updated forms, effective from 1 April 2018, firms will be required to submit details of “enhanced reporting investments”, income generated and the number of clients where it forms part of their reported annual income.

FCA orders IFAs to disclose risky product sales

Highclere Financial Services director Alan Lakey says: “The FCA does need to know which advisers are doing what, because right now I pay a levy every year towards things which I don’t do business in. Rather than just add more to the Gabriel, which already takes us about 20 hours to complete, it would be better to redesign the whole thing to make it smaller and more precise.”


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. I don’t understand this.

    What is the point of deciding to investigate an area of advice and not checking who is sitting on what? How can you possibly manage a situation without being aware of the full facts (and acting whilst a firm is still solvent and has assets to offset potential losses).

    Further, if a firm has a history of advising upon unregulated products, they absolutely need tighter regulation, so historical data is paramount (isn’t it?)

  2. Absolute nonsense – every PI insurer wants to know this so firms have to collate it. It has to be the easiest signpost to future poor client outcomes so why won’t the regulator use it?????

  3. This is scandalous. And I don’t use that word lightly.

    This has been one of the largest issues negatively affecting clients and advice firms this decade, yet they only want data on the last 12 months. Why do they not want to know more? Do they not care? Do they think the horse has bolted, so it’s already too late? Do they think that the use of UCIS/NMPI has already subsided to it’s no longer an issue?

    And if a firm can’t provide data for the last 5 years, that should act as a warning sign that the practice doesn’t have good systems and controls.

  4. Here is an idea for the FCA to implement. Those firms that cannot provide historic 5 year data lump then together with firms that have transacted these products and get then to pay the levy. The rest of us, exclude from the levy. See easy.

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