View the article online at http://citywire.co.uk/wealth-manager/article/a745021
FCA set to refer wealth firm to crime unit after 'egregious' failings
by Dylan Lobo on Apr 07, 2014 at 10:02
The Financial Conduct Authority has found 73% of firms are not being clear over the cost of advice, with one wealth firm likely to be referred to the regulator's Enforcement and Financial Crime division for 'egregious' failings.
In the second stage of a three-part series of thematic reviews the financial watchdog, which said it is also likely to refer an advisory firm to its Enforcement and Financial Crime division, found:
* 58% of firms failed to give clients clear upfront generic information on how much their advice might cost;
* 50% of firms failed to give clients clear confirmation on how much advice would cost them as individuals;
* 58% of firms failed to give additional information on charges, for example not highlighting that on-going charges may fluctuate;
* 31% of firms offering a ‘restricted’ service (they cannot advise on the full range of financial products and providers available) were not being clear they were restricted, or the nature of the restriction
* 34% of firms failed to give clients a clear explanation of the service they offer in return for an ongoing fee and/or their right to cancel this service.
The regulator said while failings were widespread across the industry, wealth managers and private banks 'performed poorer than other firms in nearly all aspects'.
The findings increases the pressure on the wealth industry, which is already the subject of an intense review into suitability.
Last week the FCA released its annual review in which it revealed it was launching an investigation into wealth firm's use of in-house funds to determine whether there were conflicts of interests at work.
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