Financial News

FCA Disappointed With Secretive Financial Advisers

Investors need straighter talking from financial advisors who are not as upfront as they could be about charges for their services.

A review by the Financial Conduct Authority revealed many advisers are failing to give their clients key information about their status, services and costs.

The review was designed to reveal if firms calling themselves ‘independent’ are really offering an independent service and how they told clients about their services and fees.

Failings of financial firms

The findings showed:

  • 73% of firms failed to tell consumers properly about the cost of advice. 
  • 58% of firms did not offer consumers clear and upfront information about the cost of their advice 
  • 50% of firms failed to give consumers clear confirmation about their personal cost of advice 
  • 58% of firms did not explain information in detail about charges, like not telling consumers that on-going charges may fluctuate 
  • 31% of firms offering ‘restricted’ services did not clearly explain why their service was restricted 
  • 34% of firms left clients in the dark about the service they offered for ongoing fees and their right to cancel the service.    

This study was the second stage of a three-part review – and the FCA is losing patience with financial advisers who are not sticking to the rules and playing fair with clients.

After the first report was published in 2013, firms were given information and guidelines about how to report information about the status, services and fees to consumers.

“We felt the previous communications outlining the difference between good and bad practice and how we expected firms to work closer to the rules; we are disappointed that firms have not made better progress. We feel they should have made some significant improvements and this has clearly not happened,” said an FCA spokesman.

Warnings about bogus advisers

The FCA has also issued these warnings about bogus firms posing as regulated financial advisers:

Dealing with an unregulated firm

If you buy shares, save money or invest with an unregulated firm, you lose any protection offered by the Financial Ombudsman and the Financial Services Compensation Scheme. Broadly, you have no independent place to complain if the deal goes wrong and are unlikely to win any compensation.

Checking if a firm is regulated

Go to the Financial Services Register to check if a firm is regulated in the UK.

Reporting a suspected bogus adviser

Find out how to report unauthorised advisers on the FCA web site

Leave a Comment