The FCA is asking firms to provide detailed information on business models, product ranges and governance and controls as part of a thematic review on non-advised and simplified advice investment sales.
The regulator has written to a sample of 14 firms asking them to supply information for the review ahead of onsite visits to be conducted in January and February 2014.
The letter, seen by Money Marketing, says the review will focus on firms’ business model and distribution strategies, their investment propositions, the customer interface through which sales are made and governance arrangements.
The letter says: “Following recent growth in non-advised and simplified advice investment sales, the FCA is undertaking a thematic review to examine these distribution channels in more detail.
“In line with the FCA’s new approach, we want to take an early look at whether non-advised and simplified advice models are delivering good outcomes for consumers.”
The FCA is requesting information on simplified advice and non-advised services separately.
Firms are requested to provide details of the business model and strategy for the service, its target market, and the rationale for the type of distribution channel and customer interface used.
The regulator is also asking for an analysis of potential risks of the service to its target market and how this was factored into its design and implementation.
On product ranges, the FCA is asking firms to supply their rationale for the product range included in the service, and the process for compiling any ‘best buy’ product lists and wider investment research provided to clients.
On customer interfacing, it is asking for pre and post-sale disclosure provided to customers, training and supporting material provided to staff interacting with customers, and copies of all financial promotions sent to existing and potential customers in the last three months.
Finally, on governance and controls, the FCA is asking for complaints data for the last six months, details on the identification and management of potential conflicts of interest, and details of any distribution deals with providers or distributors.
Firms are required to submit all of the information to the FCA by 3 January.
FCA technical specialist Rory Percival warned in April execution-only services could be subject to advice rules if the customer believes they have received advice, and that the regulator would look at the issue as part of a thematic review of non-advised business this year.