The FCA says it will not be prescriptive on charges but the regulator does have concerns about fee models which resemble previous levels of commission.
The regulator appointed four directors last week as part of a restructure of its supervision team. Among them, and charged with supervising advisers, is director of long-term savings and pensions Nick Poyntz-Wright.
Poyntz-Wright has been acting in the role since April, and will lead the regulator’s oversight of advisers, insurers, platforms and wealth managers. He joined the FSA in September 2011 as head of life insurance, and was previously Skandia UK chief executive for six years.
Speaking to Money Marketing following his appointment, Poyntz-Wright says the new structure represents a more joined up approach to supervision, compared to firm and sector specific approach under the FSA.
He says: “This is a great step forward because we have got different parts of supervision which focus on the value chain. We are pooling together all of the elements that deliver benefits and services to the customer, not just the individual elements of the value chain but the connections between them, which is where some of the interesting areas lie.”
He says one of his obvious areas of focus will be how the market is developing following RDR implementation, and the types of business models firms are adopting.
One of the main concerns Poyntz-Wright has flagged is around some of the charging structures advisers have adopted, such as contingent charging, where charges are dependant on a product sale.
Poyntz-Wright says: “We do not have a particular view about what the set-up should be. We have our new competition objective, and it is important there is a mixed approach and firms find the approach that suits them the best.
“Contingent charging is something we are observing, and wondering about its impact, but we are never going to be prescriptive in terms of what we expect firms to do around charges. That would be wrong. But where we see charges that might introduce problems, then we will point that out.”
He has also raised concerns about the early findings from the FCA’s thematic review into RDR implementation, published last month, particularly the charging models the regulator has seen which closely resemble the levels of commission paid pre-RDR.
He says: “From the evidence we saw, which was only a sample, many firms seemed to be continuing to adopt the same kind of charge levels they would have been experiencing before the RDR, but are now expressing these as adviser charges rather than as commission.
“We would expect over time more and more firms would revisit that and think about whether that is the most appropriate approach, and how it suits the different customer segments they deal with.”
Joining Poyntz-Wright on the supervision team is former HBOS principal risk adviser Karina McTeague, who will move to the regulator from Lloyds Banking Group later this year.
Poyntz-Wright dismissed the idea that the hire pointed to a “too close for comfort” relationship between the FCA and the banks.
He says: “I do not think there is anything to be concerned about from that point of view. It is an encouraging sign to be able to bring in someone with that external market experience in that sector. Although I have been with the regulator now for two years, I still regard myself as having a degree of practitioner experience, and the more we can bring that in to the regulator and benefit from that the better.”