The FT Adviser reports that the Financial Conduct Authority has sent letters to 700 adviser firms requesting evidence of all of the financial advice they gave between 1 January 2015 and 31 December 2015 as part of the FCA’s suitability review.
Firms selected from a “statistically representative sample” of the market are to provide the regulator with records of all personal recommendations by 3 May this year with independent advisers required to provide investment rebalancing details as well. From the information supplied, the FCA will decide which files the firms will have to submit for review. File reviews are expected to centre on assessing suitability, including the way firms document their investment and research processes.
We are not surprised. It all started a long time ago but started coming to a head in 2011 with the ‘Dear CEO’ letter highlighting the regulator’s concerns about investment advice suitability. Recent events have resulted in Suitability shooting to the top of the FCA’s priority list:
Clarke Willmott solicitor Laura Hazell says “A lot of firms are going to be quite shocked, and even if they have done nothing wrong, it’s bound to make some of them nervous.”
We have been watching and listening to the regulator for years and our opinion is that the FCA is going to evoke more than nerves in 2016/17. We suspect they have run out of patience and are not only in a mood to take action but are obliged to do so in order to retain credibility after the NAO’s damning report.
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