If, at that point, firms are not complying with the rules on disclosure, the FCA has said it will consider further regulatory action, including referrals to enforcement.
However, the industry is still waiting with baited breath for action to be taken against two firms identified as having “egregious failings” uncovered in the second cycle of the review.
The regulator confirmed the two firms, which includes one financial advisory firm and one wealth management firm, will be referred to the FCA’s enforcement and financial crime division.
Given that the regulator has stated that firms may be referred to enforcements for continual non-compliance with RDR requirements, Jason Kirk, group head of compliance at SimplyBiz, says he hopes advisers have raised their game in time for the third cycle of the FCA’s review of disclosure in the third quarter of 2014.
Mr Kirk says: “The regulator has commented that they don’t believe their requirements related to the disclosure of costs and services are difficult to achieve and, given that firms that act on the guidance we have provided have consistently met the regulator’s requirements when reviewed, we would agree that the requirements are achievable.”
The FCA stated a number of tools have been made available to firms, including examples of good and poor practice and a factsheet, both published in 2013.
To further help firms, the FCA has also produced a video that provides an overview of the key disclosure requirements.
Dominic Rose, acquisitions and sales director of Bellpenny, says firms need to learn from case studies and the experience of the regulator in relation to expected standards.
Mr Rose says it “does seem inevitable, however, that there will still be firms that try to duck the charging issue with clients.”
He says: “The key is simply to be upfront and fair.”
Chris Hannant, director general of the Association of Professional Financial Advisers, says firms should now be clear on what they need to do to comply, if they are not already doing so.
However he says it would probably be a good idea for all firms to look again at their processes and documentation, and compare it to the best practice examples provided by the regulator so they can make sure they are complying with the FCA’s requirements.
Simon Thomas, head of policy at Tenet Group, says he is hopeful that the industry will have raised it’s game by the time the FCA puts it to the test again.
Mr Thomas says: “The findings of the second stage of the FCA’s thematic review have been well publicised and the regulator has also issued very straightforward guidance on this subject - all firms would be advised to read the memorably numbered FCA Factsheet 007 on disclosing charges and services as this summarises key requirements on two sides of A4.
“If firms have not got this right, the FCA has indicated that they are quite prepared to take enforcement action.”
