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FCA sets sights on non-standard investment advice

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The FCA has begun collecting information from Sipp providers in an attempt to identify which advisers are placing clients in non-standard investments.

From September 2016, Sipp firms will have to hold capital based on assets under administration, with an additional allowance related to the proportion of non-standard assets held.

An FCA spokeswoman confirms the regulator has this month asked firms to hold an audit of the non-standard assets they hold, including listing how they are distributed. She says the exercise will include information on authorised advisers, unregulated advisers or directly ­executed business.

Chase De Vere head of com­munications Patrick Connolly says: “I would be very surprised if there were many advisers selling these products at all any more, from the perspective of whether they are right for the clients but also of the risk of the advisers recommending them as well.

“It would seem logical that these days it is the unregulated market selling them.”

Dentons director of technical ser­vices Martin Tilley says: “The data could be used not only to identify rogue advisers but also to highlight Sipp operators’ controls and how well they have adhered to previous thematic review guidelines.”

But he warns the information will not give a complete view of the non-standard market.

He says: “Once Sipp acceptance crit­eria for assets began to tighten, we noticed the same promoters of non-standard and unregulated investments targeting SSAS, which do not feature in this exercise.”

The industry is still divided over whether to treat commercial property as a standard or non standard ­asset, despite FCA guidance published over the summer.



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There are 8 comments at the moment, we would love to hear your opinion too.

  1. The regulator should, for at least the past 10 years, have been asking intermediaries to supply this information as part of their RMA Returns (and, of course, actually making the effort to examine the data received). It should also require proof of relevant PII cover to advise on non-standard investments. Why hasn’t it? Had it done so, we wouldn’t be seeing anything like the vast FSCS pay outs with which the rest of us are now being burdened. Yet another regulatory failure.

    Supplying false and/or deliberately misleading statements on the RMA returns should be criminal offence from which the perpetrator would not be protected by Ltd Co status. Would any of us have a problem with that? I think not.

    Instead, all we hear are baloney statements from people such as JG-J about how the FCA’s RMA reporting requirements are “pragmatic”. More like a totally bloody useless waste of other people’s time and money. FCA specialities.

  2. Here’s a tip for advisers who might be worried about giving advice to gullible clients to invest their pensions in dodgy non-standard investments. Forge the sophisticated investor certificate! If you make a good job of it, the client will find it difficult to prove.
    It happened to me. Of course, the financial advice firm is still going strong in the North West area and the directors are driving posh new cars. So watch out, there are plenty of sharks out there.

  3. I presume, by non-standard they mean un-regulated ?

    Not before time, I say, however I do think the FCA need to tread carefully, I would not like to see a broad brush comment like Margaret Cole’s “toxic” faux pa

    IMHO commercial property should be considered Standard,

  4. I really fail to see how the FCA can do anything at all regarding un-regulated advice. They are legally only able to regulate regulated advice firms. Maybe they will use the old added “It was regulated advice that lead to unregulated product being advised”. With whatever respect the FCA feel is due to itself that has to be the worlds biggest cop-out. Still if its good enough for the FSCS it should be good enough for the their masters

  5. ‘Dodgy’ unregulated products??? Non standard investments…..the question the FCA should be asking is WHY are consumers fed up with ‘regulated’ advisors churning their investments in standard assets that show no returns above inflation or charges when measured long term.

  6. I’ve yet to read a good argument (any argument at all, actually) as to why all investment advice shouldn’t be regulated and that the giving of it by an unregulated person shouldn’t be made a criminal offence. Perhaps the FCA just doesn’t have the resources. Tracey McDermott has admitted that endless changes and embellishments to its rule book are unsustainable. So, given that warnings on its website are about as much use as a chocolate teapot, STOP DOING IT and spend the money saved on a public awareness campaign via the media.

    • I’m inclined to agree with you Julian. The biggest failures and costs levied by the FSCS which then fall on regulated advisers who didn’t use the unregulated product concerned is where a regulated adviser has got the asset allocation completely wrong for the consumer. This can apply where no regulated adviser or product was involved either and it should really be the assessment of risk and asset allocation which is regulated to a greater extent than the product and assets held within the products.
      The suitability and risk is the issue and most of these things are common sense. Investing in one property can focus the gains, but it also focuses the potential for loss. it is the same with equities. Most retail consumers appear to me to want a broad spread to reduce the risk of having put too much money on black or red rather than to try and shoot the lights out by putting it all on black!

  7. Most unregulated & non-standard investments seem to be all about putting all your money on the same horse. It may well be a really lovely horse and massively better than the others in the race, but it still may be the one that gets mad cow disease and comes in last.

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