Increasing numbers of advisers are harming consumers, says FCA
The City regulator has announced a crackdown on financial advisers after it found the practices of an increasing number of firms caused harm to consumers’ wellbeing.
In a letter to the CEOs of regulated financial advice firms, the Financial Conduct Authority (FCA) said it had identified four key ways clients of advisers may be harmed.
These are: receiving unsuitable advice for their needs and objectives; falling victim to pension and investment scams; not receiving redress from the Financial Ombudsman or firms being unable to compensate consumers; and paying excessive fees or charges for products and services.
As a result, the FCA said preventing harm was “a key priority” and that there will be increased focus on these areas as part of its wider supervision of firms over the next two years.
The letter said: “You need to ensure the advice you provide is suitable, costs and charges are disclosed clearly, and you act in the best interests of your clients. Conflicts of interest must be identified and where they cannot be prevented, disclosed and managed.”
It also focused on defined benefit pension advice, an area the regulator has previously highlighted as a concern.
The FCA said despite tougher rules around DB transfer advice, “too much advice is still not of an acceptable standard”.