Wealth managers ‘singled out’ in FCA review

Wealth managers are risking the regulator’s stick with their opaque disclosure of costs, the regulatory consultancy Bovill says.

The latest, and final, RDR thematic review shows that overall price disclosure and service descriptions have materially improved.

Although 35 per cent of firms still do not show their total adviser charge in cash terms for individual clients. In the second thematic review 41 per cent did not do so.

Wealth managers particularly have come in for censure because of that.

Bovill says the wealth managers are “leaving themselves vulnerable to regulatory action” by not complying with the FCA’s order.

Of all wealth managers 36 per cent do not show a cash example to show how much initial advice will cost, compared with 15 per cent across all financial advisory businesses.

Half fail to show an example of on-going charges either, compared with 18 per cent across the industry.

Bovill wealth management and banking consultant Neil Walkling says the FCA has singled out wealth managers for criticism, despite its broadly positive stance overall.

“This is the third time that the FCA has investigated disclosure of advice costs since the RDR reforms came in two years ago,” he says.

“So firms have been adequately warned – and regulatory action taken against firms still not getting it right will reflect that fact.” 

“Providing an actual cash example of a percentage based fee structure is straightforward to do; firms should double-check their tariff of charges and make any necessary changes straight away.”