FCA chairman John Griffith-Jones says the regulator is monitoring the post-RDR advice gap “extremely closely” and recognises industry concerns over its impact.
Speaking at the Wealth Management Association conference in London this morning, Griffith-Jones said he was looking to the industry to provide advice gap solutions.
Last month FCA chief executive Martin Wheatley said he had “concerns” over the advice gap and the Treasury select committee is considering an inquiry into its impact next year.
Griffith-Jones said: “Clearly there has been a concern of the impact even if the nature of wealth management revenue streams has had slightly less impact than other areas of the industry. I would argue that what we have now is very clearly an improvement over what we had before.
“Yes, there may be side effects or unintended consequences and over the coming months we at the FCA will monitor developments in the market extremely closely. In particular we are alert to the advice gap issue and actually very interested to see where you, as part of a very competitive market place, go for new solutions that might meet the advice gap customer needs.”
Griffith-Jones also explained the FCA’s continued interest in the suitability of advice and execution-only and how to distinguish between the two.
The FCA conducted a thematic review into the suitability of wealth management advice last year, resulting in a £412,000 fine for Ashcourt Rowan last November 2012 and £3.1m for JP Morgan in May this year.
He said: “We find questions from industry very regularly over advice or execution-only and where one begins and the other ends. As you would expect these kind of details are very firmly on the FCA radar but the point remains essentially unchanged: We expect the sector to arrange investment portfolios that meet the needs and circumstances of its clients.
“The key to proving this to the regulator and clients is some form of documentation. Not, I hasten to add, documentation for its own sake but as a tool to safeguard the treatment of customers suitably and indeed yourselves should things go wrong.
“The thematic work we have done suggests there is still some room for some improvement in this area. Suitability, the idea of putting the customer at the heart of your business, will remain a live issue for us going forward.”
Griffith-Jones also called for continued focus on anti-money laundering, to restore London as a safe and appropriate place to do wealth management business.