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FCA suitability review puts complex cases and fee disclosure in spotlight


The FCA has set its gaze on complex cases and fee disclosure in its review of advice suitability, but many advisers appear to have been given a clean bill of health by the regulator.

Last week, the regulator began giving personalised feedback to individual firms on the more than 1,000 client files it collected as part of the review.

It rated the files either suitable, unsuitable, or unclear, where the regulator was unable to make an absolute judgment based on the documents provided.

The FCA has flagged up good practice as well as failings, and has invited advisers to suggest how it should feed back to the profession in a more generalised way.

In one suitability review response seen by Money Marketing, an adviser’s recommendation was deemed suitable, but the FCA suggested the client should have had more information on whether their circumstances were complex or not.

Reviewing a Sipp advice case from October 2015, the FCA wrote: “In the general disclosure document, your firm may wish to consider adding more clarity on what a complex case is, so that a client can have an idea as to whether their particular circumstances would be classed as complex.”

A source with knowledge of the review says they have seen six suitable findings and one unsuitable finding from the FCA so far.

They add that, mainly, charge disclosure seems to be in the FCA’s firing line.

The source says: “It seems a push to get firms to include better and clearer examples of fees.”

However, the FCA is noting in its letters that advisers should have another look at files where there might have been deficiencies.

The letters read: “Please revisit the client file and consider how the client can be informed of the necessary information that has been omitted.”

“It should not be assumed…that in undertaking the review and providing this letter the FCA has identified all possible areas of difficulty and non-compliance with the rules.”

“We are currently considering how best to communicate our findings to the investment advice sector and would also welcome your thoughts on how best to do this.”

The letters are signed by the FCA’s head of retail investments Clive Gordon, and give advisers two weeks to inform the FCA if they think there are factual inaccuracies within the feedback.



Advisers toe the line on FCA suitability review

Only one client file out of the 1,166 requested by the FCA as part of its suitability review has not been supplied to the regulator. The regulator first approached around 700 firms, including 500 smaller advice firms, last April, informing them they would be required to hand over client files as part of a review […]

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  1. I do hope they copy FOS in, on this little exercise !

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