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FCA targets wealth managers and private banks with new division
by Michelle Abrego on Jul 04, 2013 at 07:05
The Financial Conduct Authority (FCA) has outlined how it will monitor the wealth management and private banking sector and warned it to expect further thematic reviews.
Speaking at the Association of Private Client Investment Managers and Stockbrokers (Apcims) compliance conference, Clive Adamson, FCA director of supervision, said that the sector was under scrutiny and that the regulator would examine its sale of in-house products and how it handled conflicts of interest.
He said: ‘We want to see that you have thoroughly considered any potential conflicts of interest and will look, for example, at how many in-house products or products manufactured by an associate of the firm are held within individual portfolios – questioning whether this is right for the customer.
Adamson (pictured) said that if firms' records of customers’ attitude to risk and reasons for investing were not clear the regulator would question why.
The sector will be monitored by the FCA’s new wealth management and private banking department, due to go live 15 July, which will look at firm’s business models, strategies, culture and front-line staff.
Adamson said ‘Essentially, it is a shift from looking at how a firm controls itself to how it runs itself. The reason for this is that we believe these areas are some of the primary drivers of poor behaviours.’
Adamson also said that the regulator will be more transparent about their interests ahead of starting thematic reviews, which it has stated will be their primary way of delivering ‘conduct priorities’.
He said: ‘We are in the final stages of setting up a wealth management and private banking department at the FCA in order to provide an area of expertise for this important sector.
‘In time, we will also conduct further thematic work in this space. But pending that and given the complexities of the businesses operating within this industry, we believe that firms should focus on a number of key areas.’
The key areas include:
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