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FSA calls on providers to monitor advisers

The FSA has called for providers to take more responsibility for the quality of distribution and monitor the quality of advice provided by advisers.
Speaking at the FSA’s annual Asset Management Conference, chief executive John Tiner said although providers need not necessarily proactively monitor the behaviour of individual distributors they should look to see what aggregate statistics say about quality of sales.
Tiner said a consultation paper to be published next week will explore the interface between provider and distributor and where responsibility lies.
He said providers should monitor persistency rates, sales, volumes and trends that can then be checked against projections.
“The key thing is that data, once gathered and analysed, is acted upon,” said Tiner.
He said providers could monitor where the sales and marketing data produces ‘outlier’ information such as high amount of firm specific sales or unexpected geographic concentration of sales.
Tiner said: “It is surprising to us that many product providers are cautious about this – putting their reputation in the hands of others who “own” the relationship with customers without necessarily either providing clear, accurate information or actively considering distribution quality.
It is a harsh commercial reality that much brand damage can be incurred in this way – the customer remembers the fund brand name when it comes to complain and not the smaller local distributor.”
The paper will also look at provider responsibility for providing the right type of information to the distributor at the right time so the distributor can properly advise on and recommend the product.
Prudential recently announced it working to identify advisers carrying out unusually high levels of transfer business and look at options such as severing agencies, cutting commission payments or reporting advisers to the FSA in extreme cases.
FSA director retail firms division Sarah Wilson told delegates it was not the FSA’s intention for providers to police advisers but that providers should take an interest in what their data shows about the quality of distribution.
Aifa director general Chris Cummings said he would be ‘massively uncomfortable’ if there were any suggestions that manufacturers should police distributors.


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