Regulation  

FCA warns over unregulated introducer firms

FCA warns over unregulated introducer firms

The FCA has issued a warning over an increase in advisers outsourcing regulated work to introducers.

The alert, published on 2 August, stated that a growing number of regulated firms have engaged in activities with introducers that could see them face regulatory action, even if the offence in question is committed by a third party.

The warning added the regulator is “very concerned at the increase […] in cases in which the introducer has an inappropriate influence” on authorised firms.

Article continues after advert

Industry relationships with introducers were highlighted last year, when Robert Shaw, the former advice chairman of the now liquidated firm, TailorMade Independent, was fined and banned by the FCA following the mass direction of TailorMade clients into unregulated investment schemes.

Despite the FCA’s ongoing crackdown operation, some advisers feel there is more than enough scope for suspect adviser activity to fall through the cracks.

“The latest regulatory flurry ignores the elephant in the room that unauthorised advisers continue to promote unregulated investments, taking money from the general public direct, and the regulator is powerless to do anything,” said Simon Webster, managing director of Kent-based advisers Facts & Figures.

“IFAs have already closed the door to these investments, so for the regulator to ‘clarify’ its rules on introducers at this late stage sounds much like a horse and stable door,” Mr Webster added.

In addition to highlighting punishable offences, the warning also clarifies muddy territory in the world of adviser/introducer relations, and asks firms to question whether introducers have any input in completing fact find and/or attitude to risk questionnaires. He added, “Most business from introducer(s) go into the same group of investments.”

Although Mr Webster is sceptical about the regulator’s ability to wholeheartedly eradicate the issue of questionable advisers and introducers, he acknowledges that the FCA has been instrumental in closing “the massive loophole” that allowed unregulated investment “salesmen and fraudsters” to operate in the UK.

kuba.shandbaptiste@ft.com