OpinionOct 10 2018

FCA search ruffles feathers

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FCA search ruffles feathers
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Finding a good adviser is not easy, and for many people finding an adviser at all is a chore too far, which is why so many of them rely on the high street banks and building societies for their financial products, with the requisite difficulties that can entail.

So, the idea the Financial Conduct Authority would create a search service for its own register that should be easy for consumers to use would be a good thing, or so you would think.

But, this search offered by the FCA is proving contentious, and it is easy to see why.

The search facility was implemented after the 13,000 British Steel workers who had requested a transfer from the British Steel Pension Scheme found it hard to find an adviser using the register as it stood. 

It is also designed to help people avoid scams, according to Jonathan Davidson, executive director of supervision, retail and authorisations at the FCA. 

Some advisers are concerned about how clear their own entries are, while many are concerned about the fact that unauthorised advisers are listed at all.

In fact, when the initiative was announced, Mr Davidson said: “We have invested a lot in the Scam Smart campaign. A key part of that is to look at the register and make sure the firm they are dealing with is a registered firm.

“We have been working to make [the register] more usable and to make it more searchable to check: does the firm exist? and are they who they say they are?”

All very laudable, and to be honest, it sounds like it makes a lot of sense for both consumers and authorised advisers.

So, it is a real shame that it is ruffling feathers throughout the adviser community because not only does this search facility include unauthorised advisers – yes, with a warning that the FCA “strongly” advises consumers not to use that adviser – but it also seems to use language that could make unwitting consumers uncertain about using some of the authorised advisers that are listed.

A cursory search of the register shows that for a company exempt from the Markets in Financial Instruments Directive II, this is the notation in bold that shows up in a search: “This firm has requirements or restrictions placed on the financial services activities that it can operate.”

When you click through to the information to see what that means, you are informed that: “This firm cannot hold client money. It may be able to control client money if it has the necessary requirements.” You also learn that it is Article 3 Mifid exempt.

If you are in the know, this makes perfect sense.

But how many people who are looking for an adviser are really going to know what this means? The reality is it will create as many questions as it answers.

In addition, advisers are also complaining that other technical items relevant to the FCA and advisers only are being presented to consumers in a way that could make them confused about the veracity of the adviser in question. 

Now, surely if the point of changing this search facility is to help people find a good, decent and honest adviser in their area, why is the FCA not making this as easy and as clear as possible?

Some advisers are concerned about how clear their own entries are, while many are concerned about the fact that unauthorised advisers are listed at all, albeit with a warning not to use them.

Schools of thought

There are two schools of thought on this. On the one hand, it is a good thing to include those advisers who are not authorised with a warning, so the FCA is clearly stating this is not an adviser you should use. But if it was not included at all then you would have less chance of coming across it.

Also, if you find an unauthorised adviser through another avenue, such as an internet search, then a cursory search on the FCA website to find them might create comfort where there should not be any.

On the other hand, if these firms were not included at all, then there would be no question that the FCA was in any way sanctioning these firms. To be fair, the warnings are pretty clear. But to anyone without any knowledge of how regulation works, there is still the question of why these advisers are on there at all.

The FCA says this is currently in beta form, so it is a work in progress and any issues will be ironed out over time. Yet it is available to the public, and that means all of the quirks and queries are available to view by the potential customers of advisers. That cannot be ideal.

If an adviser who had not complied with FCA regulations on, say, its website said in its defence that the site was in beta format, I am not sure the FCA would be as forgiving as it is expecting the advisers to be.

If you find any problems with your entry on the search service, then tell the FCA.

It might be a statement of the bleedin’ obvious, but it is not unreasonable to expect a change to errors.

More worrying though is the regulator’s choice of terminology, which does no-one any good if it serves simply to confuse consumers about whether an adviser is able to legitimately help them or not.

Alison Steed is a freelance journalist