The 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.
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.”