Financial Conduct Authority  

FCA fails to clamp down on incompetent providers

FCA fails to clamp down on incompetent providers

The FCA won't clamp down on providers whose poor service leads to client detriment, according to the regulator’s former technical specialist.

Rory Percival, ex-technical specialist at the FCA and current non-executive director of Pensionhelp, said that "provider admin incompetency" was nothing new but something that wasn’t on the watchdog’s to-do list of things to tackle - despite several high profile instances, such as the problems with Aegon's and Aviva's platforms.

Mr Percival said: "The simple answer is that the FCA would not get involved in something like this.

"Provider admin incompetency has been a recurring issue for decades. We have recently seen problems with platforms such as Aegon causing problems too. Advisers suffer and clients may be inconvenienced too but it wouldn't feature particularly on the FCA's radar."

When asked if the FCA would take action, a spokesman for the City watchdog said the regulator was not looking to get involved in provider administration issues at this time.

Aegon and Aviva have been berated by financial advisers due to re-platforming issues earlier this year that saw advisers facing disruption.

Legal and General’s (L&G) digitally-led adviser services also recently came under fire when one adviser said he had ditched the provider due to poor communication.

Ivor Harper, director of financial advice firm Park Financial, said while intervention from the FCA would be ideal, the watchdog inevitably had "bigger fish to fry".

He said: "The extra costs due to poor service from providers are ultimately swallowed by the intermediaries who are a bit disenfranchised.

“The FCA has a limited budget so I imagine cracking the whip on the likes of Aegon and Aviva are quite low down on its list.

"The only way I can imagine providers being forced to shape up is if advisers totally boycott the ones that have poor services.

“The only thing that will incentivise providers to make a change for the best is if their profits are suffering and if advisers take business away."

Darren Cooke, financial planner at Red Circle Financial Planning, who was recently affected by L&G's service, said the FCA should only get involved if the poor adviser services end up causing financial detriment to customers.

He said: "When a provider’s service to advisers starts affecting clients and in turn costing them money, then the FCA should get involved whether that is done publicly or behind closed doors.

"It could have a word with those providers whose services are meaning that clients aren’t getting a good service or the correct information that they need.

“If the FCA did this publicly then they should have the power to fine companies and set out guidelines for them to follow."