The FSA says it may carry out more investigations into multi-manager advice after it found insufficient adviser understanding of funds and the effect of charges on performance.
Money Marketing revealed in August that the FSA was conducting a number of thematic visits into advice given on multi-manager funds.
In its November newsletter, the FSA says some firms were unable to support the reasons why multi-manager funds were chosen or why they met clients’ needs. It says suitability letters in most cases contained insufficient information on the pros and cons of multi-manager. Overall, there was insufficient appreciation of the effect total charges could have on investment performance, with some firms unaware of the full level of charges until the regulator pointed this out to them.
The FSA says: “As a result of the findings from this explanatory work, we may carry out further multi-manager work in the future.”
The newsletter also warns firms carrying out final-salary pension transfers via direct-offer promotions to ensure they abide by FSA rules.
It addresses concerns over the uncertainty of advising clients in the run-up to pension personal accounts and warns that advising clients to wait until 2012 to save would be wrong.