The Financial Services Authority is “aware” of de-authorised advisers that are continuing to give clients advice that is then placed with providers as non-advised business and has called on intermediaries to blow the whistle on peers that have officially exited but continue to advise.
A source with knowledge of the regulator’s activities in relation to the FSA’s post-RDR thematic reviews told FTAdviser that the regulator knew that a number of de-authorised advisers were giving advice and that this would inform its upcoming probe into the practice.
A spokesperson for the FSA agreed there is “certainly the potential” that de-authorised advisers are operating in the market and called on regulated advisers to come forward and report any offenders.
The spokesperson said: “The FSA intends to undertake a thematic review into non-advised sales to ensure people who say they are not giving advice are not giving advice.
“This would be classed as unauthorised business and we could take action against them and clients would have to take an action against them as they would not have recourse via the FSCS. Clients need to ask advisers for evidence they are qualified and they should also check the FSA register.
“We are asking if anyone has any intelligence or knowledge to tell us.”
A number of advisers have told FTAdviser that they have seen evidence of de-authorised advisers continuing to give advice post-RDR.
Tim Purdon, managing director of IFA Paladin Financial Services, said: “I have anecdotal evidence to that effect. They give them [clients] advice and then people go ahead and do the business direct.
“Now they might carry out that execution-only business with another adviser who is happy to accept that business. None of us should be carrying out any business that has been recommended by someone who is not RDR-compliant.
“The scheme itself may be regulated but the adviser is not regulated, therefore if the individual does not have the protection of the Financial Ombudsman Service or the FSCS then they will have no protection whatsoever.
“Someone who is not compliant cannot be keeping up to date with that which is going on in the marketplace, or legally or from a tax review perspective.”
Julian Pruggmayer, IFA for West Midlands-based Financial Risk Management, agreed, adding that it is likely many advisers that have spent years building up their business will continue to give advice despite being de-authorised.
He said: “Does the FSA want to address this? If the FSA really wanted to regulate financial advisers, they would have been speaking and listening to them.”
