Regulation  

FCA reveals how it is investigating non-advised sales

The FCA is launching a review into the growing number of execution-only businesses that have come to market since the Retail Distribution Review rules came into force.

A spokesperson for the regulator told FTAdviser that over the next couple of months execution-only brokers will be contacted by FCA investigators and asked for information about how they are doing business.

The watchdog confirmed it was checking whether consumers were getting what they wanted and needed from non-advised salesforces.

The industry could expect to hear the findings of this review during the first half of 2014, the spokesperson added.

The FCA’s review of this growing part of the industry comes more than two years after compliance experts questioned the suitability of execution-only for most consumers.

Moving into offering execution-only services post-RDR could leave advisers vulnerable to claims if clients are not fully informed of the risks involved in various investments, compliance experts warned.

Tim Sutcliffe, managing director of Shropshire-based Pi Financial, argued that execution-only, which means no advice is given, is only useful for a particular kind of client, specifically those who may want to make changes to their Isas or mortgages.

Mr Sutcliffe said: “We have found it to be very, very rare when a client has been down and does not require any advice. If they want execution-only we will carry it out but they are in the minority.

“It’s not uncommon for the mortgage market. For example, if a deal has come to the end of a fixed-term and they want to extend it with a building society and are aware of the rate.”