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Wealth firms on alert as FCA's RDR patience runs out
by Dylan Lobo on Apr 08, 2014 at 10:52
The latest thematic review into adviser charging has left the Financial Conduct Authority (FCA) extremely peeved.
The findings found an astonishing 73% of firms were not being clear about the cost of advice.
To add insult to injury the financial watchdog said it could take enforcement action against two firms – one wealth and one advisory –for ‘egregious’ failings.
It said while price failings were widespread across the industry, wealth managers and private banks 'performed poorer than other firms in nearly all aspects'.
After all the manpower and effort involved to create the retail distribution review, which was implemented a little more than a year ago, the results are a real kick in the teeth for the FCA, led by Martin Wheatley (pictured).
FCA director of supervision Clive Adamson was not impressed.
'I am disappointed with the results of our latest review looking at whether advisers are clear with their customers on costs and services provided,' he said in a statement.
Malcolm Kerr (pictured below), senior adviser in financial services at EY, underlined temperatures are likely to be rising at the FCA’s headquarters.
‘The latest review is disappointing and shows that the market is still in a state of transition from the old world of commission on investment products, to the new world where fees and services are clear cut,' he said.
‘It's remarkable that, more than one year on from the introduction of RDR, very few firms' websites have a clear statement of what they offer and how much they charge. The rules around describing fees and services are clear and whilst there is good practice out there, it needs to be across the board as it looks like the FCA is starting to lose patience.’
Kerr believes communication could be one of the major problems as wealth and advice firms struggle to make the transition to fee-based systems.
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