View more on these topics

FCA director: ‘We will never declare victory on suitability of advice’

FCA supervision director Megan Butler says that the FCA is not ready to “declare victory” on suitable advice even as more than 90 per cent of recommendations were rated favorably by the regulator in a recent review.

In a study this May, 93.1 per cent of cases were found to be suitable. However, the review of more than 1,000 pieces of advice found that 41.7 per cent breached disclosure rules

The FCA will publish a similar review in 2019, assessing advice given in the next year.

Speaking to Money Marketing ahead of restarting the work, Butler says: “I don’t think we will ever declare victory on the suitability of advice, or disclosure for that matter. That is because I’ve been a supervisor since 2008. In a wholly unconnected area which is clients assets, that hadn’t been the subject of intensive supervision for years by the time we got to it because people thought it was fine. We found out very quickly in 2008 it wasn’t fine. One of the reasons was because we hadn’t asked questions about it.

“That’s a very particular example but I think that’s a fairly common feature of a lot of supervision I do. Unless you keep on at it, people don’t do it.  So I will never declare victory. On suitability of advice, we could go out and find 99 per cent is fine. I would say great, but I’m going to come and look in two years time. Because if I don’t, when I come and look in eight years’ time, I wouldn’t be surprised if its gone down to  40 per cent.”

Suitability review three months on: Has anything changed?

Butler also played down the possibility of offering further templates to help advisers’ disclosure scores improve.

She says: “Advisers, particularly the smaller ones, would love it if we gave them a whole set of templates. I understand why, they haven’t got huge compliance functions that can sit and help them. They just want some of these things to be clear and easy for them. The difficulty is its very hard to put out a template that is a one size fits all.

“They’re not trying to avoid their responsibilities they just want certainty. We can’t give them that, it’s just not possible. It’s an unsafe situation and it will lead to people not getting the right disclosure for them.”

A full interview with Butler will be published in this week’s Money Marketing print edition, and will be published online with a full transcript shortly after

Recommended

3

Are IFAs missing out on workplace wins?

The workplace presents a significant opportunity for advisers, yet many are still shunning this sizable market, experts argue. The pension freedoms and auto-enrolment have increased the unmet need for advice in the workplace. Some larger employers and pension trustees are no longer content to leave employees to fend for themselves among scammers and fraudsters and […]

Tax thumbnail

Autumn Budget: Tax evasion crackdown to raise £23bn a year

The Government has outlined a raft of measured designed to bring in an additional £160bn from tax cheats. The seven-year plan lists 18 different ways the Government is looking to raise the revenue. These include extending how long HM Revenue and Customs can go back in time to assess non-compliance for offshore tax evaders. Double […]

MM-AutumnBudgetBanner
3

Lifetime allowance 2018/19 increase confirmed but pensions absent

The Government has confirmed that the lifetime allowance 2018/19 will rise in line with inflation, but savers have been offered little else in the Autumn Budget. The lifetime allowance will increase from £1m to £1,030,000 to match CPI from 2018/19.  Though the maximum amount the can be saved each year into a Junior Isa or […]

The Rubik’s Cube: China’s policy trilemma

By Douglas Turnbull, Investment Director, Head of Chinese Equities China faces a ‘Rubik’s Cube’ policy trilemma, whereby it needs to sustain a minimum acceptable level of growth, deal with issues such as overcapacity and reform the financial system to make it a far more efficient allocator of capital. Given the contradictory nature of these objectives, […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. Na Megan we don’t need templates for suitability letters…..we need some symmetry across the FCA, FOS and PII providers, as they all follow their own agendas.
    That’s who suitability letters are written for, did you not know that ? the same for disclosure complete gobbledygook and completely irrelevant.

    As you have been a supervisor since 2008, I am surprised you haven’t cottoned on to that one yet !

  2. Any firm whose disclosure was declared less than adequate should carefully re-examine what they submitted and what the regulator said about it. We weren’t included in the review but we asked to have a case reviewed. Our disclosure was declared inadequate. We argued the case. Eventually, they agreed it was adequate. I don’t want to say “They just didn’t read it properly” because I do in fairness appreciate that it must be a difficult job when every firm’s disclosure documents are structured uniquely, but of course, that will be the case if they’re not working to a template. I suspect that if the firms in question looked at the evidence and the FCA’s verdict and argued their case as we did, the supposed failure of disclosure would be nowhere near as high as the FCA has claimed. The FCA are not ogres; you can have an intelligent discussion with them. They don’t like admitting they’re wrong, nobody does, but facts are facts. The principals of firms declared to be at fault due to inadequate disclosure should look again at the evidence and the verdict, and if they feel they have a case to say they have been wrongly judged they should fight it; they should press their case. By not doing so, if they genuinely feel wronged, they are doing themselves and the rest of us a disservice.

    • I should also say that if on the other hand, your disclosure is sub-standard you should get your act together because, if you don’t, you are likewise doing your own firm and the rest of us a disservice.

  3. Of course they won’t. If they ever do (impossible) then they will be putting themselves out of a job – and that will never do.

  4. paolo standerwick 27th November 2017 at 9:59 am

    Simplybiz sell the adviser community templates, so why can’t the FCA?

  5. “Please can you tell us FCA what good looks like. The majority of us want to get this right. You can be very prescriptive if you want to. KIIDS, KFDs etc. You have shown what good looks like at your roadshows so how about disclosure here.

    • Check COBS – it tells you exactly what you need to disclose and often how.

      Cross reference this with the clear, fair and not misleading rules and you should be golden.

      Disclosure is rules based so it can be worked out.

  6. Why don’t they issue the same rose tinted spectacles they wear, with a button for 100% hindsight to be used “in 8 years’ time” when all those templates are declared flawed?

  7. Boring Evan – Maybe come up with something equally childish but at least ‘new’.

Leave a comment