The FCA has denied there is any difference in the way the regulator and the Financial Ombudsman Service interpret its rules.
Speaking on suitability reports at a Personal Finance Society event yesterday, FCA lead associate Chris Hewitt said claims the regulator’s rules and FOS decisions conflict are “fundamentally flawed”.
He says: “From our perspective we don’t see any evidence of a material misalignment between our interpretation and FOS’ interpretation.
“We suspect there might be some advisers out there who think that if they’ve got a good process, and they’ve done a fact find with illustration and provided a suitability report with risk warnings, that when the FOS upholds a complaint against them that because they went through the process, and did what the FCA asked, there must be some misinterpretation there.
“But that line of thinking is fundamentally flawed. Just by going through a tick-box FCA process doesn’t make unsuitable advice suitable.
“If you make a recommendation and it is fundamentally misaligned with the risk profile of the client and the assets, it doesn’t matter if you’ve filed a suitability report, that’s not going to change that advice and make it suitable.”
Hewitt says the regulator has no inherent concerns about the handling of insistent clients, as long as firms are diligent in their approach.
He says: “There’s nothing wrong with processing an insistent client case so long as it is properly handled.
“The concern we’ve got is that we’ve seen a fair few examples where it hasn’t been properly handled.
“We have also seen what we termed a ‘papering exercise’, where the case is processed on an insistent client basis, but the report and the circumstances around it suggested that it wasn’t actually insistent client.”