The regulator has reminded advisers to think twice before accepting invitations to sporting events such as golf, tennis and rugby through work.
Recent findings published by the FCA concluded hospitality received or provided by firms conducting Mifid business did not always appear to “enhance the service to the client” and included other social activities such as concerts and evening dinners.
Susan Hill, chartered financial planner, said this is a more a subject of personal ethics than the activities themselves, “Does it encourage me to recommend their product or invest client money? Most certainly not. My personal ethical standard is above enticement – I am a financial adviser with professional qualifications and a high personal standard of ethical behaviour.”
This release followed on from the regulator’s guidance paper in January 2014, “Supervising retail investment advice: inducements and conflicts of interest’, which explained why certain practices were likely to create conflicts of interest and result in firms not acting in their clients’ best interests.The regulator also concluded that hospitality provided or received was often included in connection with activities that did meet the requirements. It added logs did not always record relevant detail and were not always maintained, firms incurred costs when facilitating training or educational material and Mifid firms were not providing clients with a value of allowable benefits provided.
Throughout 2015 the FCA conducted a thematic review about benefits provided and received by firms that carry out Mifid business and which carry out regulated activities in relation to a retail investment product.
Simon Webster, managing director at Facts and Figures, said the regulator should spend more time focusing on more important matters, “It worries me that the FCA seems to have so much spare time on its hands. Are they seriously suggesting that advisers might do more business with Provider X because it buys them lunch or takes them on a golf day? They worry about this instead of the real issues that cost clients’ real money. Where is its sense of priority? Where is its management of risk?”
