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FSA continues probe into clawback debts

The FSA has warned that it will continue to monitor firms with product provider clawback debts after finishing thematic work that resulted in 11 firms being forced into taking remedial action.

The FSA said at Money Marketing Live last autumn that it was collecting information from providers on adviser firms with big clawback debts.

The work has now been completed, with 11 firms asked to improve their systems and controls and selling practices.

But the FSA has warned that it will continue to monitor firms with clawback debts, in particular those with debts with more than one provider, those that have big debts in relation to their size, and those with evidence of legal action being taken against them by providers.

As part of the project, the FSA researched the position of about 150 advisers that providers had reported as having clawback debts or that had previously shown financial weakness.

It then visited the 15 firms it had the most concerns about to assess selling practices in detail.

The FSA says it found firms with clawback debts tended to have poor systems and controls and selling practices. For example, the client’s attitude to risk was adequately established in only 33 per cent of files reviewed.

The FSA’s July newsletter says: “This project is a good example of the increasing use we are making of the data we receive. In particular, data we regularly receive from product providers on com-mission clawback debts owed to them by financial advisers. We will continue to monitor firms with claw back debts.”

Calculis director Alex Pegley: “I think this is a great idea, allowing the FSA to use the data at its fingertips to monitor and clamp down on individual firms that are giving everyone else a bad name.”

For more regulation stories, visit www.moneymarketing.


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