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FCA: Small adviser firms may need to outsource to survive

FCA technical specialist Rory Percival

The FCA says small and one-man adviser firms will be able to operate effectively in the post-RDR world but may increasingly need to outsource a lot of their functions.

Speaking at The Platforum Roadshow in London last week, FCA technical specialist Rory Percival said the new regulatory requirements may be beyond the abilities of one person acting alone.

He said: “Taking on board changes in the market, reviewing the market and doing all required as one person may be beyond the abilities of many people. But with a lot of those functions it is reasonable to outsource and through this, smaller firms or one-man bands can operate reasonably effectively.”

Percival added that when using outsourced tools providing “factual information”, advisers do not have to double-check results but can take them at face value.

Examples include product provider information about underlying investments in a fund and providers’ calculations to determine projections for product performance.

He said: “When looking at information or tools provided by third parties, it is reasonable for you to take as read factual information you are given without any further digging.

“If you enter numbers into a tool and it comes up with ‘x’ as the result, you are not expected to double-check that answer.”

Access Wealth Management partner Jim Clancy says: “Rory Percival is right: regulation is becoming more onerous for one-man bands and many are looking to outsource to relieve the burden.”


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. headbelowthe parapet 25th April 2013 at 1:55 pm

    I think it’s sensible to ignore this particular pronouncement – third party tool providers always absolve themselves of any responsibility via disclaimers.

    Can you ever imagine a situation where you can rely on mistakes by third party tools that you haven’t verified as being reliable, as a defence against a FCA investigation?


    Also, this statement is wholly deniable as misinterpretation of what was actually said…unless of course the FCA phoenix is actually significantly different from its FSA predecessor – I for one never take anyone’s word for it:

    Nullius in verba

  2. You can take 3rd party info as read until someone complains and the FCA tell you that as a professional adviser you should not rely on 3rd party info.

    Don’t fall for it. They want your eyes, your eyes i tell you…………………………… (voice becomes increasingly paranoid and tails off)

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