FCA search ruffles feathers

Alison Steed

Alison Steed

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.

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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. 

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.