Consumer champion and regulator the Financial Conduct Authority has warned advisors that they should not interpret a ‘loose policy’ on giving advice as a green light to ignore the best interests of their clients.
In a keynote speech to independent financial advisers at an industry function, the FCA’s technical specialist Rory Percival laid out four advice principles.
He explained the priority for every adviser was the best outcome for the client and not cutting corners or looking for the highest fees.
Giving the right financial advice
The four main points to consider are, he said:
- Think the advice through and ask if the proposed solution is the right one for the client
- Make sure the solution works by applying professional knowledge and skills
- Keep records of discussions and advice. The FCA is not so concerned about the way records are kept but that they are accurate and provide full details of the transaction so compliance officers can understand how decisions were made
- Don’t leave the job unfinished – monitor performance and organise regular reviews
Percival said: “We regard some rules as prescriptive, like disclosure, but we are more open with how advisers manage their advice process.
“We think that’s the right approach as advisers approach dealing with clients in a variety of ways, and there’s nothing wrong with that so long as we can clearly see how decisions are made.”
He also suggested IFAs should keep a close watch on any warning notices issued by the FCA to compare how other firms have gone wrong with their own record-keeping and business processes.
“When looking at warning notices overall, it’s generally one of the four pointers I have explained that causes the problem,” said Percival.
Warnings about bogus advisers
The FCA has also issued two warnings about bogus firms posing as regulated financial advisers:
- Pan American Global Partners
- https://www.fca.org.uk/news/warnings/www-sgcbuk-com
- Protec Advisors
- Protec Gold Advisors
- Swiss Investor Club AG
- Hobart Roth LLC
- www.citibankinguk.co.uk (Misusing the name of FCA authorised firms)
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
