Advisers have accused the FCA of being “deluded” by telling those with concerns about suitability letters to speak to the Financial Ombudsman Service.
Speaking at a Distribution Technology conference in London last week, FCA technical specialist Rory Percival reiterated a view he made public in November that suitability letters are too focused on defending potential complaints and not enough on client engagement.
He said: “We often get thrown back at us the argument that advisers have to put in all the information they do because of the FOS.
“First of all, I don’t buy that. If suitability reports are personalised and clearly demonstrate why the recommendation is suitable for that individual client and is communicated in an effective way, I don’t see why that would have less chance of being upheld by the ombudsman.
“Secondly, I can’t speak for the ombudsman, but why don’t you ask them? They run a number of events around the country and have outreach managers who go to regional events.”
Responding to a question on whether the FCA and FOS would meet to discuss the issue and give the industry guidance, Percival replied: “Watch this space.”
An FCA spokesman clarified that the FCA and FOS are not in talks on the issue, but will be speaking at a number of events with joint question and answer sessions over the coming year.
A FOS spokeswoman says: “We understand that advisers genuinely want to do the very best for their customers – and when this is reflected in the advice given and relevant regulations are followed, there’s no need for advisers to be concerned.”
Highclere Financial Services partner Alan Lakey says: “Rory Percival is deluded. The problem is there is no consistency in the FOS’s decisions so advisers have to put in as many caveats as they can.
“What we really need is to get the FCA, the FOS and some advisers round the table to discuss the issue.”
West Riding Personal Financial Solutions managing director Neil Liversidge says: “It is utterly disingenuous for Rory Percival to make these comments. I have zero confidence in the FOS and that will remain the case unless their decisions are made by people with proper experience.”
But Page Russell director Tim Page says: “One solution could be for advisers to document everything they need to for compliance reasons in an internally-held file, and only include the basics in the suitability letter.”