Emma Ann Hughes  

FCA fails to deliver fact find reassurance

Emma Ann Hughes

Emma Ann Hughes

When you first engage with the regulated world of financial advice it is easy to grasp why you need to share so many details about your life.

Many people's first encounter with an adviser will be when they have finally scraped together enough cash to get on the property ladder.

It is frustrating having to spend so much time sharing your incomings, outgoings and, if the adviser is wise enough to recommend protection, have the process further dragged out with sharing information, such as what your family members dropped down dead from, as well as all your ailments, weight and height.

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You understand why you have to share so much information - to get exactly the right home loan and protection policy for your individual needs.

But it is frustrating when you hopefully take that next life step that requires financial advice and need to go through all these details - and pay for the pleasure of sharing them - again.

That is why there is much to commend in the Financial Conduct Authority finalised guidance relating to the Financial Advice Market Review.

The FCA is allowing advisers to port another intermediaries fact find - but with caveats.

The adviser receiving the fact find must check the information they receive is accurate and therefore able to be relied upon when making a recommendation. 

Fair enough. You don’t take ownership of another man’s goods without doing some checks.

For example, only an idiot would buy a used car based on the seller’s claim it has only done a couple of thousand miles. 

A sensible buyer checks how many miles are on the clock and gives the tires a good kicking too.

But rather than detail exactly how they expect you to check the fact find information you have received is good enough to offer, the FCA only makes suggestions about how you might like to kick the tires.

The FCA stated clients may find it more convenient to review information in manageable sections rather than being asked to download a large document containing information.

Firms were also told by the FCA to consider how behavioural biases can potentially affect clients’ ability to provide reliable information, for example, by looking at whether the language is clear and comprehensible and avoiding misleading, confusing, imprecise and excessively technical language.

Similarly, the FCA said firms may consider that the reliability of information may be enhanced by asking a client to confirm information by section rather than by completing a single tick box or similar to confirm their details as a whole.

But the FCA failed to deliver a clear checklist for advisers on how to make sure the fact find you receive is any good.

A cynic would say the reason why they aren't detailing how you MOT a fact find that is passed on to you is because if what they say falls short of catching out dodgy fact finds then the regulator will be blamed for people getting the wrong advice.