Here are five things I learned from the 110-page FCA annual report.
The Retail Distribution Review costs a fortune
The FCA spent £3.3m monitoring the RDR in the 12 months to the end of March. In the previous financial year it spent £2.4m, meaning the regulator has spent at least £5.7m on the RDR. Has it been worth it?
The regulator attributed the latest costs to carrying out three phases of a review looking at how firms are meeting RDR requirements. By the way, in case you have any doubts, the regulator’s second review revealed “disappointing” results, suggesting that firms are still not being clear enough on how much their advice will cost clients.
In relation to the nature of the advice given, it found that restricted firms were not being clear on their restrictions and that firms were not giving a clear explanation of the services they offer.
The FCA found similar failings in its first of three reviews, but at the time conceded that the new disclosure rules were relatively new and produced guidance to help firms comply.
The results of the third thematic review, expected to focus on disclosure as well, is expected at the end of autumn.
Arch Cru redress costs
By April 2014, advisers had paid out £11.8m as redress to Arch Cru investors, out of a total estimated £31.8m.
In December 2012, the FSA confirmed it was set to launch a consumer redress scheme over the failure of Arch Cru that will force advisers to provide redress to investors.
Advisers were forced into identifying cases where they may have mis-sold Arch Cru funds and make redress payments where appropriate.
In 2013, for the first time, the regulator used its power for the first time until FSMA to impose a redress scheme following an industry-wide review into the sale of Arch Cru funds.
I though the payout would have been more by now.
Even now, the Arch Cru debacle still rumbles on with a group litigation action against Capita, the former authorised corporate director of Arch Cru.
Financial Adviser columnist Gill Cardy said last week that around 1,000 investors are claiming their investment losses are attributable to the ACD’s failings in the administration and compliance of the various UK authorised Arch cru funds, as set out comprehensively in the Financial Services Authority’s final notice of November 2012.
You’re a nosey bunch
Clearly wanting more information than the regulator makes readily available, financial advisers made 54 requests to the FCA under the Freedom of Information Act to the 12 months to the end of March.
