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FCA probes advice consolidators

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The FCA has written to financial advice consolidators requesting information on suitability processes when acquiring new firms, Money Marketing can reveal.

The regulator is understood to have asked firms to provide details of their business plans for the next year, as well as details of how they treat customers gained through consolidation.

In particular, the FCA is seeking reassurance that consolidators are carrying out adequate suitability checks before shifting newly acquired clients onto their own panel of providers.

The regulator is also understood to have asked whether firms are automatically inserting new books of clients into their own investment proposition.

It is not yet clear how many firms have been contacted as part of the exercise.

An FCA spokesman says: “As part of the FCA’s supervisory model, we will from time-to-time ask firms to give us more information on how they operate. We do this to get a better understanding of the firms we regulate, how the market is working and to see how consumers are being served.”

The process is not part of a thematic review, but is an initial attempt to gather information from what the regulator deems to be “an area of interest”. It is the first time such an exercise has been carried out among advice consolidators.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Now this is a good news from the regulator.

    Just hoovering up advice firms and treating the acquired clients as so much fodder is not an ideal practice by a long chalk.

  2. I couldn’t agree more Harry.

    I think the suitability checks are completed in most cases but then a switch is proposed regardless of the outcome

  3. There is a distinct difference between a consolidator with their own funds/platform etc. and one that is genuinely taking on the clients of a retiring adviser. For obvious reasons.

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