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FSA warns of enforcement action on TCF

The FSA says enforcement action is looming against firms which have not responded to its well publicised messages on treating customers fairly.

As the regulator gets under way with new work to assess how firms are implementing the regime, head of investment, small firms division, Jonathan Fischel says advisers cannot complain that they have not been warned about the forthcoming crackdown.

Fischel says the FSA is carrying out research among a representative sample of firms to assess how its TCF message is getting across.

He says the work is similar to the TCF quality of advice work carried out last summer, which made uncomfortable reading for many in the sector and led the FSA to lay down its March 2007 deadline for firms to show progress.

Less than a third of advisers surveyed in the summer provided non-commission-earning advice such as recommending debt repayment before recommending other investment products and only a third undertook a full review of customers’ needs and objectives. Half of firms offering fees discouraged customers from taking the fee option.

Fischel says the FSA has seen a broadly positive response from advisers criticised in the summer research, with many taking its concerns on board and implementing detailed action plans.

But he warns the time is fast approaching for a clampdown on firms which have not responded to the FSA’s messages, with the possibility of enforcement action now looming.

Fischel says: “We will be looking to see firms making a decent effort to improve and show they are embracing TCF and we have done a vast amount of work to help them in this area. No one can say they have not been warned about the actions we are prepared to take if firms fail to act.”

He says the FSA has gone to great lengths to help advisers with roadshows, self-assessment tools and website guides.

After the March deadline, Fischel says the FSA will follow up its current work to iron out any further areas of concern and ensure improvements are being made, with further research possible later in the year.

Elsewhere, Fischel claims the retail mediation activities return procedures are bedding down well, with over 90 per cent of firms reporting on time, despite concern from some advisers of the extra burden of the online reporting.

He says the FSA is still assessing evidence it collected about adviser firms with severe commission clawback debts, with an announcement of its findings due later in the year.


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