Financial Conduct Authority  

FCA clarifies what it expects from 'concerning' advisers

FCA clarifies what it expects from 'concerning' advisers

Advisers should not rely on the Financial Conduct Authority to put right any harm they may have caused to consumers, the watchdog has warned.

In two reports published by the FCA today (21 March) on the approach taken to supervision and enforcement, the regulator said it expects firms to examine their own affairs and, where appropriate, take their own remedial action.

This could include putting right any harm or damage that may have been caused to consumers or agreeing to vary permissions or to the imposition of requirements by the FCA.

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But firms should not wait for an investigation in order to act in a way they think is right, the FCA has stated.

If a firm does take action to address harm caused by serious misconduct, the watchdog warned it will not necessarily save themselves from being subject to FCA action, the regulator has warned.

The comments come after the watchdog stopped several advice firms from giving defined benefit (DB) transfer advice when it looked into recommendations made to British Steel Pension Scheme (BSPS) members.

The FCA stated: "If firms and individuals fully account for any harm caused, including putting it right where there are reasonable grounds to do so, we will consider this when applying sanctions. 

"In extraordinary cases, it may determine whether a sanction is required at all.

"If a firm or individual fails to take steps to address harm or refuses to cooperate fully with us, this will be taken into account and may justify heavier sanctions."

In light of the number of advice firms which have had their permissions varied because of their activities surrounding defined benefit transfers, the FCA also explained its approach to this.

The watchdog stated: "Where there is evidence firms may be in contravention or are not meeting our standards, we may use our powers under Part 4A of FSMA to vary permission, impose requirements or change individuals’ approvals on our own initiative.

"These powers may be used to prevent or to stop harm from becoming serious."

The FCA said its aim when it uses sanctions is to make sure they are sufficient to deter the firm or individual from re-offending and deter others from offending at all.

Dennis Hall, a financial adviser with Yellowtail Financial Planning, said: "Depending on the level of harm, firms should be allowed to dig themselves out of a hole and put things right but if there are critical things that have occurred then I think the regulator needs to be much firmer."

damian.fantato@ft.com