FCA supervision director Megan Butler says that the FCA is not ready to “declare victory” on suitable advice even as more than 90 per cent of recommendations were rated favorably by the regulator in a recent review.
In a study this May, 93.1 per cent of cases were found to be suitable. However, the review of more than 1,000 pieces of advice found that 41.7 per cent breached disclosure rules
The FCA will publish a similar review in 2019, assessing advice given in the next year.
Speaking to Fund Strategy sister title Money Marketing ahead of restarting the work, Butler says: “I don’t think we will ever declare victory on the suitability of advice, or disclosure for that matter. That is because I’ve been a supervisor since 2008. In a wholly unconnected area which is clients assets, that hadn’t been the subject of intensive supervision for years by the time we got to it because people thought it was fine. We found out very quickly in 2008 it wasn’t fine. One of the reasons was because we hadn’t asked questions about it.
“That’s a very particular example but I think that’s a fairly common feature of a lot of supervision I do. Unless you keep on at it, people don’t do it. So I will never declare victory. On suitability of advice, we could go out and find 99 per cent is fine. I would say great, but I’m going to come and look in two years time. Because if I don’t, when I come and look in eight years’ time, I wouldn’t be surprised if its gone down to 40 per cent.”
Butler also played down the possibility of offering further templates to help advisers’ disclosure scores improve.
She says: “Advisers, particularly the smaller ones, would love it if we gave them a whole set of templates. I understand why, they haven’t got huge compliance functions that can sit and help them. They just want some of these things to be clear and easy for them. The difficulty is its very hard to put out a template that is a one size fits all.
“They’re not trying to avoid their responsibilities they just want certainty. We can’t give them that, it’s just not possible. It’s an unsafe situation and it will lead to people not getting the right disclosure for them.”
A full interview with Butler will be published in this week’s Money Marketing print edition, and will be published online with a full transcript shortly after