The Financial Conduct Authority will not be making any changes to its rules or taking any enforcement action following its suitability review.
This was confirmed by Linda Woodall, the FCA’s director of financial advice, following the publication of the review’s report last week.
She said: “There is no evidence to suggest that we should be changing our rules.
“I think the rules and standards are there and our job is to keep working with the industry to help them reach those standards.
“We have not taken any enforcement action, and neither do we plan to.”
Ms Woodall ruled out changing the rules after the review found 93.1 per cent of advice was suitable while 2.5 per cent was unclear and only 4.3 per cent was unsuitable.
While the level of unsuitable advice was low, the FCA found there were issues with firms not considering the limits of the risk profiling tool they were using.
The review also found issues with replacement business, where firms were recommending that clients give up valuable guarantees without good reason or where the additional costs appeared to outweigh the benefits of the recommended solution.
The regulator also found issues with disclosure.
While 52.9 per cent of firms were providing an acceptable level of disclosure, the regulator stated 41.7 per cent were "unacceptable" when it came to spelling out how much they charge and what services they provide.
The FCA found that firms were broadly meeting the rules around product disclosure and the information required for suitability reports – although some reports were too long or complex.
The main issue was in the area of charging structures, with firms using hourly charging structures not providing an estimate of how long each service would take and firms using charging structures with a wide range.
damian.fantato@ft.com
