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FCA warns firms over continued failures on inducements

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Firms providing hospitality for advisers are falling short of inducement and conflict of interest rules, the FCA says.

The regulator’s response to its 2015 thematic review of 23 providers, advisers and asset managers, published today, warns some advice firms are receiving payments from providers that exceed the cost of training and other activity.

In addition, the FCA says hospitality is not always being designed to benefit end clients with some events – such as golf or rugby matches – being tacked on.

The FCA says: “Individuals from firms had participated in or spectated at sporting or social events, such as golf, tennis and concerts. These benefits did not appear capable of enhancing the quality of service to clients as they were either not conducive to business discussions or the discussions could better take place without these activities.”

It adds: “Advisory firms incur costs when facilitating training or educational material supplied by product providers (for example setting up a webinar on the advisory firm’s systems) and when collecting management information on behalf of a product provider. Product providers were making payments to advisory firms in excess of the costs incurred.”

No firms have been named and the regulator will not give details on what type of firms have flaunted the rules.

However, in February Money Marketing revealed the contents of a letter sent from the FCA to a major pension provider detailing the instances where inducement rules were broken.

These included two pop concerts, stand-up comedy, sailing and West End theatre.

Finalised guidance was published in 2015 and three years ago the FCA sent a “Dear CEO” letter uncovering firms working around the commission ban.

In response the regulator wrote to 23 providers, advisers, and asset managers asking for more details of distribution agreements and hospitality benefits.

The regulator is not taking any further action, saying: “Your firm should consider these findings and expectations and ensure they meet the current requirements.”



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

  1. Jesus, how hard can it be guys? A child could work this out. Just stop, yes?

  2. MM commented last week on the increase in mergers,acquisitions and consolidation and the complementary move to restricted status. All of that is likely to make the problem of inducements worse as providers seek to secure those with key distribution power.

  3. For heaven’s sake. Do you really think a lunch or a bottle of wine is going to induce anyone. One would have thought that fat brown envelopes are changing hands.

    I suppose it isn’t an inducement or a perk for the boys and girls at Canary Wharf to travel first class on expenses and to be put up in 5 Star hotels with all gourmet meals provided when all they are doing is appearing on some panel or other at an arranged CPD event, or chewing the fat with some other bureaucrat in Timbuktu.

  4. PS. I’d like to know how they find out about these things. So one gets taken to a comedy show. How does the FCA know? I’ll bet the firm or the recipient doesn’t write a letter telling them. So is some sad sack sneaking to teacher?

    For goodness sake if they want to get all holy how about going to Downing Street and fining Cameron? What do they imagine foreign aid is? At the end of the day it is an inducement for the recipients to do business with the UK. I was an exporter – I know how it works.

  5. For crying out loud, just get over yourselves will you ! surely there are more important issues to be tackled than stopping the odd IFA (or whoever) going to a rugby match (or such like)

    You do realize people are getting scammed out of their pensions as I type, right ? I will let you know, if you cant work this out for yourselves, this causes more consumer & industry detriment, a few away days is a drop in the ocean by comparison

    Sort your lives out you are an embarrassment !

  6. Does the FCA have a shred of evidence on which to base its typically pernicious assumption that there must be some sort of link between corporate hospitality and provider bias or consumer disadvantage? If so, let it publish this evidence for all to see and to debate in open forum. It is, after all, forever wittering on about openness and transparency ~ though only, it seems, on the part of others. What does the FCA have against corporate hospitality anyway?

    “No firms have been named and the regulator will not give details on what type of firms have flaunted the rules”. It’s just another exercise in self justification.

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