The FCA says it may investigate an apparent “blurring of the lines” between advised and execution-only services.
Speaking at a Tax Incentivised Savings Association event in London last week, FCA head of wealth management and private banking Bob Ferguson said the services offered by some firms were “blurring the distinction between execution-only and advice”.
He said: “We are very conscious that the boundaries of what firms see as execution-only and what firms see as advice are being tested. We may probe into that.”
Ferguson also said firms can expect to see “a good deal of supervisory attention from the FCA” around their charging structures, and questioned whether firms are “rewarding people for taking advantage of their clients.”
Ferguson heads up the new division within the FCA’s long-term savings and pensions team which concentrates on the supervision of wealth managers and private banks. The department has been active since July.
His concerns echo those of FCA technical specialist Rory Percival, who warned in April that execution-only services could be subject to advice rules if customers believe they have received advice.
Hudson Green & Associates principal Ian Hudson says: “The regulator would be right to look at this, as it is a grey area. Right now firms are able to flex the definition of what is execution-only, which can sometimes be a full-blown advised service without the required level of investor protection.”