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FCA pledges tougher scrutiny of high-risk advisers

FCA building FCA feesThe FCA has said it will make it harder for firms advising on high-risk investments to become authorised with the regulator as it plans to place tougher oversight on them.

In its business plan for the year ahead, released this morning, the regulator placed long term savings and pensions as one of its seven core focus area.

Within this, the FCA said work was in place to target high-risk and complex investments.

The plan reads: “In 2018/19 we will carry out a programme of work to tackle incidences of consumers entering into high-risk investments which are unsuitable for their needs.

“This work will enable us to identify where there are problems with high-risk investments. We will also strengthen our authorisations gateway and supervision for firms that provide advice on high-risk and complex investments. This will ensure they improve their disclosure and reduce the risks of harm to retail investors.”

The regulator says it is also continuing to review the effectiveness of robo-advice models as it plans to review whether or not the Financial Advice Market Review achieved its objectives of widening access to advice next year.

Director of strategy and competition Christopher Woolard tells Money Marketing: “This is a bit of a stock take of what’s been bread and better in the Advice Unit. We now have sufficient volume and scale step back look at best practice.”

In his introduction to the report, chief executive Andrew Bailey references the regulator’s continuing fears over defined benefit pension transfer advice in particular.

He writes: “In the past year, we have been extremely concerned about some
firms exploiting consumers’ lack of knowledge of pension products when advising them to transfer out of defined benefit schemes. We have recently published new rules on pension transfer advice. These rules aim to improve the quality of pension transfer advice to help consumers make informed decisions for their individual circumstances.”

The FCA is also mulling whether to extend the powers of independence governance committees to strengthen their ability to call pension schemes to account over value for money.



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There are 6 comments at the moment, we would love to hear your opinion too.

  1. What does “We not have sufficient volume and scale step back look at best practice” mean?

    That aside, could Mr Bailey explain why its GABRIEL/RMA returns system has failed dismally thus far to achieve the objectives of this latest initiative?

    Also, does Mr Bailey not realise that pension transfer advice is so complicated and multi-faceted that, no matter how much information is provided, making an informed decision is completely beyond the capacity of the vast majority of consumers? Ultimately, they do what they’re told, for better or for worse.

  2. As with DB transfers the COBS default starting position should be to start with authorised, regulated and easy to understand products unless there is contemporary evidence to suggest that a more complex or risky solution meets the needs of the client.

    If it is clear that advisers are serving their own interests by recommending unsuitable products then tough sanctions should be employed.

  3. Why is it the FCA continue to look through the wrong end of the telescope ?

    I think we can positively say regulating advisers is not working….. the good will always be good … the few bad ones among us, will always be bad, and the FCA will hear the stable door banging in the wind because they cant stop them (the bad)!
    Product regulation, dare I say, should be seriously considered, also one must question the FCA’s appetite to actually sort this never-ending problem out, i mean, the more train wrecks, the more motor way pile ups, that just keep happening behind them, secures their position both financially and in job security !

    I don’t think they will ever tire of rearranging the deck chairs…..

  4. Risk and complexity are subjective (on offshore bond solely holding equities could be deemed to be complicated and high risk by some) however assuming UCIS to be the “complicated and high risk” investments in the proposed spotlight, I was under the impression such investments required a HNW and/or a sophisticated investor declaration?

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