RegulationOct 1 2019

Advisers warned they are still not customer focused

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Advisers warned they are still not customer focused

Advisers "leave a lot to be desired" when addressing services and charges in initial disclosure documents, the regulator's former technical specialist has warned. 

Speaking at the Chartered Institute for Securities & Investment Financial Planning Conference 2019 yesterday (September 30) Rory Percival said the introduction of the FCA's product intervention and product governance guidance may have been met with negative reaction from the advice industry but the rules were "overdue". 

The Financial Conduct Authority introduced Prod in January 2018 in a bid to improve the industry’s product oversight and governance processes. 

Mr Percival said: "I think it was appropriate to bring in some rules around this because I don't think the market does it very well, and still doesn't do it very well."

Mr Percival, who worked at the FCA for ten years and now runs Rory Percival Training and Consultancy, said the regulator had regularly set out its expectations of advisers to keep clients at the centre of the decision making process but warned the industry was still not living up to them.

He said: "I have been in the sector for over 30 years and I would say I've never met a single firm that is genuinely, across the board, client centric. Not once.

"I know you [CISI members] are all the good guys and the best planners and advisers in the country. But I don't think that you are entirely in the right place in this area."

Mr Percival said he routinely sees firms that still have poor suitability reports that are too long, despite the issue being a long-held focus for the regulator. 

He added: "Initial disclosure documents - in terms of you talking about your services and your charges, I think a lot of them leave a lot to be desired. 

"And using one platform, I don't think that works frankly. 

"Clients loving a certain platform doesn't cut the mustard as a reason [for using it]. Advisers love it, paraplanners love it but I don't care and I don't think the FCA cares. 

"The question is whether it is the right one for the client."

Initial disclosure documents were the focus of another seminar at the conference, with advisers urged to limit their liability in the event of a court claim by including specific terms in their client agreements. 

Philippa Hann, partner at Clarke Willmott, said there was "no real downside" to advisers including limitations in their terms and conditions which restrict the amount to be paid out in the event of a client claim. 

Devoting time to ensuring initial documents include reasonable disclaimers and limitations could possibly protect an adviser in court, Ms Hann said. 

This extended to terms limiting the time period a client, or former client, has to make a claim in court, but not in relation to complaints made to the Financial Ombudsman Service. 

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