In its newsletter to financial advisers, sent out today, the FSA says between September and December 2007 it carried out visits to 50 adviser firms to review process for giving advice, including management information. A further 50 firms were mystery-shopped.
Although the visits are still being analysed, the FSA says around a third of firms were not actively analysing and using management information they had gathered to review their processes and test whether they were treating their customers fairly.
The newsletter says: “It was disappointing that, in spite of producing some form of MI including Key Performance Indicators, so many firms failed to consider these on an ongoing basis as part of their monitoring of advising practices. In addition many firms did not adequately consider findings from their review of customer files as part of their MI.”
The newsletter also highlights a recent review by the FSA into whether firms are doing enough to ensure appointed reps are treating their customers fairly.
It found a number of issues with the 35 firms who participated including firm’s own written procedures not being followed in practice, too much reliance placed on the remote checking of client files and poor progress with treating customers fairly.
The newsletter says: “Whilst the results for the financial adviser sample were somewhat better than the other sectors, there are over 1,300 ARs conducting business of behalf of small financial adviser firms. Firms need to ensure the ARs they recruit are fit and proper and that their customer facing staff have the necessary knowledge and competence to advise customers.”