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FCA gives firms in due diligence review clean bill of health

Past business review addresses due diligence failings, but regulator fails to revisit firms asked to clean up processes

The FCA has completed its assessment of firms from its thematic review of due diligence last year, saying it has not needed to take further action against those with which it identified issues.

In February last year, the FCA assessed how firms went about conducting research and due diligence on products and services such as platforms.

Of the 13 advisers it reviewed, it said it would ask three to sign an “attestation” – in which they agreed to rectify issues – and one to undergo a past business review after finding that some firms had been placing convenience above client service in their platform choice.

The regulator also expressed concern over whether centralised investment propositions were ensuring advice was suitable for each client.

Responding to a Freedom of Information request from Money Marketing, the FCA confirmed that, while all three firms that were asked to sign an attestation had done so, it had not revisited them to verify they had made changes to their processes.

The regulator said: “We asked all three firms to undertake and confirm (attest) to the completion of a series of actions to address the specific areas of concern identified. The FCA did not conduct any further visits to the firms involved in order to ensure compliance with the attestations. However, we may test compliance during the course of our supervisory work in the future.”

The FCA added that the past business review had not uncovered consumer detriment but had addressed the issues it raised.

It said: “We had concerns that the due diligence approach adopted by a firm in our sample may have led to consumer detriment and requested that the firm undertake a past business review to determine whether detriment had occurred; to address any detriment identified and to take steps to improve the due diligence approach going forward. The results from the past business review addressed the FCA’s concerns fully. No consumer detriment was identified.”



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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Julian Stevens 3rd May 2017 at 3:03 pm

    Um, did this D review encompass UCIS which, I think we can all agree, are where the real problems lie?

  2. Ha Ha Ha “The FCA did not conduct any further visits……” I know of at least one IFA that puts 99% of Clients into the same DFM undre an agreement whereby they will get a bonus after 3 years or so. HA HA HA you couldn’t make it up

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