Threesixty Services is setting up a discretionary fund manager due diligence service amid fears a number of DFMs are not compliant with regulatory requirements.
Threesixty will assess DFM’s processes in order to validate them for member firms’ use.
The service will give advisers a summary of DFMs following a Threesixty audit. The service will be free for Threesixty firms. DFMs will have to pay for audits, which will cost up to £10,000.
Advisers will receive confirmation that investment processes meet regulatory standards and a full review of firms’ supervision and monitoring processes.
Threesixty will also confirm the experience and qualifications of key individuals and ensure any promotional material truly reflects its service.
The support services provider is set to begin auditing DFMs in June, with information made available to advisers over the following two months.
Threesixty managing director Phil Young says: “There are concerns around whether some DFMs are actually carrying out the things they say they do in their marketing literature.
“We are seeking to offer advisers an independent perspective on individual DFMs to make their assessment easier and clearer.”
In February, the regulator warned advisers using DFMs run the risk of “systemic misselling” if their clients’ risk profiles are not correctly mapped against those of the outsourced investment solution.
Evolve Financial Planning director Jason Witcombe says: “It will definitely be worthwhile for advisers to get all of this information in one place from a trustworthy supplier such as Threesixty.”