FCA issues adviser warning on introducers


The FCA has warned advisers on the risks of authorised firms taking business from unauthorised introducers.

In the alert, published today, the FCA says it is concerned at the increasing number of cases where an introducer has had an inappropriate influence on how the authorised advice firm works.

It is also concerned by authorised firms outsourcing regulated activities to unauthorised firms.

The regulator says: “Many authorised firms we have visited do not have adequate input or control over the advice they are ultimately responsible for giving to customers.

“This has been particularly evident in relation to advice on switching and transfer/conversion of pension benefits. We have specific concerns where this advice involves movement of pension pots to unregulated, high-risk, illiquid products, whether they are based in the UK or overseas.”

It has seen examples of introducers using authorised firms’ reference numbers to get customer policy information sent to them directly, which means the authorised firm loses control over how that information is used.

The regulator also says some authorised firms give clients referred to them through introducers a reduced service which is often designed by the introducer. This can include pre-prepared suitability reports.

The FCA says: “Providing a simplified or limited advice process to consumers to facilitate investment into unregulated, high-risk, illiquid products, whether they are based in the UK or overseas, or delegating regulated activity to an unauthorised party will not mean that the firm can avoid liability or regulatory action for unsuitable advice (or lack of advice).

“Following supervisory intervention, firms have varied their permissions so they can no longer operate a business model where there is an inappropriate influence by the introducer”

It adds: “It will be you and your firm against whom regulatory action will be taken, and there is also a risk that you may become involved in an illegal scheme.”