About 58 per cent of firms failed to give additional information on charges, for example not highlighting that on-going charges may fluctuate, plus 31 per cent of firms offering a ‘restricted’ service, where they cannot advise on the full range of financial products and providers available, were not being clear they were restricted, or the nature of the restriction.
The FCA stated 34 per cent of firms failed to give clients a clear explanation of the service they offer in return for an ongoing fee and/or their right to cancel this service.
While failings appeared widespread across the industry, Clive Adamson, director of supervision at the FCA, said wealth managers and private banks performed poorer than other firms in nearly all aspects.
The regulator stated it expects firms to meet their standards and will be checking on the industry’s progress again by the end of this year.
As a network, Simon Thomas, head of policy at Tenet Group, says in addition to regular monitoring activities, members undertake regular Treating Customers Fairly questionnaires with a random sample of end-consumers.
He says this asks a number of questions around performance and service, including asking clients if they understand how much they would be charged for services provided by their adviser, if they understood when and how they would need to pay and did they understand the type and level of service they received from their adviser.
In Tenet’s most recent survey, scores for these three questions were between 97 per cent and 98 per cent.
Mr Thomas says adviser firms can do this type of research themselves as well.
He says: “It would certainly be good practice for the principal to telephone a sample of clients and check they were happy with the way the service was described and delivered and that they understood it.
“Equally, if a client disengages, it is important to understand why so any issues can be addressed and this can only be determined by asking them.”
Mr Thomas reveals Tenet also monitor investment firm’s tariff of charges as part of a review and approval of appointed representatives’ initial disclosure documents.
He says: “High fee levels will be investigated and we will challenge firms to justify why this level of fee is warranted.”
