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Executives slam trade bodies and ‘naive’ FCA for lack of fee guidance

by Elsa Buchanan on Apr 10, 2014 at 09:03

Executives slam trade bodies and ‘naive’ FCA for lack of fee guidance

Senior executives have attributed damning Financial Conduct Authority (FCA) findings that wealth managers are not fully disclosing their charges or restricted status to a lack of guidance from the regulator and trade bodies.

The FCA found 73% of firms were not fully disclosing advice costs, while 31% of restricted businesses were unclear about the nature of their restriction.

Guy Stephens, a director at Rowan Dartington, argued significant regulation such as the retail distribution review was bound to lead to misunderstandings and it could be seen by some as naïve of the regulator not to have recognised this.

He added: 'The discretionary fund management space was very confused, and pulled its information from bodies and lobby groups that all held different views on what needed to be done.

'That's not to blame the FCA, but I would have hoped they would have worked with the industry.'

He added: 'If they were more prescriptive to start with, we wouldn't be in this place. If you're not prescriptive, you can't be too harsh when people don't get it right, and 73% means a lot of people haven't got it right.'

The FCA revealed that a wealth firm and advisory business have been referred to its enforcement and financial crime division for ‘egregious’ failings. It said wealth managers and private banks performed poorly in ‘nearly all aspects’ – a disappointing conclusion, given the FCA’s ongoing Suitability Review.

Michael Lally of Thesis Asset Management (pictured) called on the Investment Management Association and Wealth Management Association (WMA) to do more.

‘The trade bodies need to liaise: getting guidance would really be useful,’ he said. ‘What the FCA is trying to do is not get a situation where people are forced to do things, but one where there is a change in mentality or culture.’

Lally believes trade bodies should provide the industry with clarification about how to interpret the FCA’s warnings.

The WMA confirmed it is in talks with the FCA about the findings. A spokeswoman stressed its members ‘send their customers written confirmation of all costs, properly itemised’.

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2 comments so far. Why not have your say?

Knowledgable insider

Apr 10, 2014 at 13:52

What a shame that these tyrants dont regulate MP's...only then would we get some semblance of more sensible regulation i.e. a lighter touch where it is perfectly obvious that most advice is genuine as there is now no possible commission bias what else could it be? These lot are so clearly jobsworths and defending their jobs by creating unecessary works for the regulated that it is about time someone in this Government actually did something about it!

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Apr 10, 2014 at 14:40

It might be worthwhile the FCA indulging in a little introspection. If that number of people in a particular sector are getting it wrong then maybe, just maybe, there's a problem with the message?

Behavioural regulation - similar to the behavioural economics recently beloved by the FCA but applied to their own house...

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