Seventy-three percent of UK independent financial advisers still do not provide the right information about charges, more than a year after the retail
distribution review (RDR) came into force.
In two cases, the failings were so egregious that the Financial Conduct Authority (FCA), which produced the statistics, has referred the companies to its enforcement and financial crime division. The unnamed firms were described as a financial advisory firm and a wealth management firm.
“While we have seen a lot of positive progress and willingness by advisers to adapt to the new environment, I am disappointed with the results of our latest review looking at whether advisers are clear with their customers on costs and services provided,” says Clive Adamson, director of supervision at the FCA.
The research found that 58% of advisers failed to give clients clear upfront generic information on how much their advice might cost, and 34% failed to give a clear explanation of the service they offer in return for an ongoing fee and/or clients' right to cancel this service.
The authority found that, although failings were widespread across the industry, wealth managers and private banks did worse than other firms on nearly all measures.
The results come from the second of a three-cycle assessment into the disclosure requirements of the RDR, which came into force at the start of 2013 and was designed to give customers more choice and improve competition by forcing advisers to be transparent about costs.
The FCA says it will consider further regulatory action, including referrals to enforcement, if it finds more failings in the third cycle of the assessment, due for the third quarter of 2014.
“We will be helping the industry again to understand our requirements with the release of a video guide but these results are a wake-up call and we expect the industry to respond,” says Adamson.
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