The regulator has given wealth managers the all-clear when it comes to putting their clients’ money into in-house investment products.
The FCA today revealed its thematic review into the use of in-house products from wealth and discretionary managers had “not found evidence of any significant failure......to identify and manage conflicts of interest”.
The regulator said, in general, “firms recognised the potential risks from conflicts of interest to their customers, their reputation and market integrity”.
In-house products are investment vehicles manufactured by a wealth manager, or a related firm such as its parent company or affiliate. These can then be included within portfolios the wealth manager runs on behalf of clients.
The FCA examined 18 firms which managed a total of £146bn and which on average invested 20 per cent of client assets into such in-house products.
The regulator had been worried about the conflicts of interest that could stem from such an arrangement.
But it said it found “no evidence” that remuneration structures favoured the use on in-house products and that the “due diligence” carried out was the same on in-house or third party products.
However, the FCA said it had found some firms had “shortcomings”, generally around the communication to clients of the use of in-house products or inadequate monitoring of the use of such products.
But aside from giving feedback to certain firms on how to improve their processes, the FCA said it would be taking no further action following the review.
