Pressure from the regulator has mounted in 2019

Pressure from the regulator has mounted in 2019

Financial advisers have faced shifting regulatory sands over the past 12 months, with the Financial Conduct Authority training its focus on a number of core areas.

From boosting consumer protection, to placing greater responsibility on individual senior staff, we will look at the major regulatory themes of 2019 impacting the financial advice industry.


Over the past year we have seen companies working hard to ensure they are fully prepared for the Senior Managers and Certification Regime, which has covered all solo-regulated companies since December 9.

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The new rules, which seek to shift accountability to senior staff, are touted as the regulator’s flagship piece of regulation as the UK exits the EU, signalling the direction of regulatory travel as we step into a new decade.

Our observation on the ground is that companies have been struggling to meet the regulation’s certification requirements.

Specifically, we are seeing that many companies do not have the training and competence infrastructure in place to certify advisers, and are having difficulty identifying which staff need to be certified.

Companies need to make sure they are compliant with the new rules, particularly as the regulator looks to take its first disciplinary scalp under the SMCR, and may well turn its sights to smaller, less well-equipped companies.

DB pension transfer advice

The FCA painted a bleak picture of the defined benefit pensions transfer advice market when, at the tail-end of 2018, it said less than half of advice given was suitable.

Since then, the regulator has spent the latter half of 2019 taking action against those judged to be making insufficient effort to improve their transfer advice practices, with some companies receiving one or two-day check-ups from the regulator to assess the robustness of advice being given.

In some cases, we have seen FCA visits and client file reviews result in a ‘request’ for the company to halt advising on DB pension transfers, and to carry out a back-book review of all transfer recommendations made since the pension freedoms were first introduced in 2015.

The regulator has certainly shown willingness to intervene on pension transfer advice and, given the poor standards it continues to find, the issue looks likely to remain top of the regulatory agenda.

Vulnerable customers

Vulnerable customers sit at the centre of the FCA’s push to ensure adequate protection for consumers.

Indeed, improving protection for vulnerable customers is set out as a priority in the regulator’s latest Business Plan.

The FCA began putting the plan into action in July, when it issued more detailed guidance for companies on how to deal with vulnerable clients and committed to taking action against those continuing to fail to treat them fairly.

Companies can take the opportunity to engage with the forthcoming second stage of the FCA’s consultation, which will inform the ideas the regulator is looking at to bolster protection for vulnerable customers.

Beyond 2019

This year has proved a year of growing regulatory scrutiny on the financial advice market – a trend that looks unlikely to abate in the year ahead.