Brewin Dolphin calls for consistent due diligence rules

Brewin Dolphin calls for consistent due diligence rules

The head of Brewin Dolphin’s intermediary division has said a common due diligence framework should be created to help advisers know where they stand when choosing a discretionary fund manager.

These comments come after the Financial Conduct Authority criticised the “disappointing” level of due diligence carried out by advice firms.

Earlier this year, technical specialist at the FCA Rory Percival said inadequate due diligence underpins a lot of the problems facing advisers when outsourcing certain services.

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Speaking to FTAdviser, Brewin Dolphin’s head of intermediary Robin Beer argued there is a lack of consistency when it comes to advisers carrying out due diligence.

He said the problem is there is no common framework to help advisers properly assess a prospective business partner, with advisers all having different processes for carrying out due diligence.

“From any DFM’s point of view, the biggest challenge is how we can help advisers meet their due diligence needs,” Mr Beer said.

“The market is very fragmented at the moment and some advisers don’t really know what due diligence means, which is hard on DFMs.”

Mr Beer, who has worked for Brewin Dolphin since 2008, said moving towards a consistent framework over the next few years would be a good step forward, adding: “Advisers would know where they stood, and it would reduce the work and effort and cost for all parties.”

Anthony Villis, managing partner of First Wealth, said he agreed that having a standardised process can help make it easier for advisers to compare DFMs and get a “flavour” for different companies.

“It’s not rocket science so I can’t understand why the DFMs don’t already have a collective way of doing this,” he said, adding, however, he disagrees the lack of a consistent framework is a particular issue at the moment.

“But as more advisers outsource their investments and need this information, this means there is an increasing need for a joined-up way of carrying out due diligence.”

“Firms which do due diligence often do it well,” Mr Villis added. “The problem is some advisers don’t do due diligence at all, so I think if we had some regulatory process that is similar for all companies then it would be helpful.”