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FSA wrap warning over risk management


The FSA has warned IFAs to start paying much greater attention to risk management as they change their business models ahead of the RDR.

Speaking at the annual Platforum conference in London FSA conduct and risk division supervisor Rory Percival said that risk management and oversight was the “gaping hole” in the debate currently surrounding RDR transition.

He said: “To a greater or lesser extent, intermediary firms are changing their business model, usually at least in part in response to the RDR. Where business models change, firms are in a new place, and they have new or different risks. It is of particular concern that among the 12 firms that we reviewed, not one had adequately reviewed their management and oversight in light of the changes they had made. In most cases they had not considered this issue at all and this is simply not acceptable.”

Percival argued that there has been extensive discussion about the business and investment implications of using platforms and the transition to the RDR.

But he added: “The gaping hole is discussion and engagement of risk management and oversight changes that need to go alongside these general business changes.

“Hence our challenge to the industry today: our challenge is directed at firms, compliance consultants, transition consultants, the media, andconference organisers. The challenge is to put this subject on the agenda, engage with this issue, start discussing ways forward. Let’s resolve this now before it becomes too big a problem and we find other firms like Moneywise that we have to take through the painful enforcement process.”

The FSA fined Moneywise IFA £19,600 in September for platform advice compliance failings.


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There are 11 comments at the moment, we would love to hear your opinion too.

  1. What in the name of all that is unholy are they on about now?

    Why can’t they SHUT UP and DO THEIR JOBS?

    I reported a non regulated individual targetting British Gas employees with a pension ruse, taking 15% in fees then investing in a ponzi scheme.

    THREE WEEKS LATER I get an emailed response asking me to fill in a form which had nothing to do with what I had reported.

    In the interim, probably several people have been conned.

    Guess what the FSA have done?

    Precisely nothing about this, but instead twitter on about nonsense.

  2. Obviously the FSA are looking to raise funds for the Christmas Party!!!!!!!!!!!



  3. This isn’t biased regulation, it is known as good business practice.

    If a firm undertakes any form of business development they have to document the risk management controls they have in place to ensure adherence with the firm’s rules.

    It’s nothing new!!

  4. Steady – it’s wrong that advisers pay little heed to what is truly meeting their clients’ needs but instead recommend a single provider/wrap because it’s easier for themselves and in some instances comes with financial incentives. It meets the advisers need. That’s not independence.

    Nothing wrong with the single wrap but be honest to your client – you’re restricted.

  5. Let’s have some meat on the bone.
    What types of risk is this man refering to?
    Or is he just letting us know what the FSA will be levying fines on next; without giving any prior indication of what they think ought to be demonstrated.

  6. Typical quangocrat language. All sorts of gobblygook which is completely impossible to understand and which is therefore wide open to FSA fines for non-compliance.

    “Let’s resolve this issue” he says – exactly what is the issue ?

    This bloke is typical of the people who work in massively overstaffed government departments where they have an infinite amount of time to produce nothing of any importance or use !

  7. I hope this dipstick is looking for a new job in the not-too-distant future.

    Who’d employ him and doing what exactly ?

  8. To Duncan Parkes | 14 Oct 2010 1:50 pm

    It is bias regulation because the only source of funding the FSA is through the revenue they obtain from member fees and the amount of fines they can impose on the members, no doubt to argue, well it keeps the membership fees low!

    The only way for a non-bias regulator to operate would be to seperate the funding from the membership i.e. Government Funding thus giving a truly independent regulator.

  9. “Who’d employ him and doing what exactly ?”

    Hmm… RMP00009. Look him up.

  10. Chaps, you need to realise that Rory is an ex IFA and has probably more relevant qualifications than most readers – he knows his stuff.

  11. I see part the problem is that the RDR is still very much in debate. The way it will work is still to an extent uncertain.

    But we have to prepare today for these changes, changes enforced upon us by the FSA.

    I do not understand how firms would have not made changes without review? Surely you’d have to review in order to instigate change…

    Personally I have taken nearly 5 months to undertake and start implementing change ahead of RDR, firstly looking hard at whether I can continue in the way that I have traditionally. I cannot and this means significant change, it requires much time and effort that I cannot do free of charge.

    This is being explained to my clients, they accept that I cannot work for nothing and understand that the Regulator is bringing in these changes. Having said that I believe that the restructure of the client proposition is an improvement that my business and more importantly my clients will benefit from in the years ahead!

    Best wishes to all….

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