Financial Conduct Authority  

FCA writes to 125 advisers in suitability crackdown

FCA writes to 125 advisers in suitability crackdown

The Financial Conduct Authority wrote to 125 advisers at the beginning of the year probing their retirement income advice records. 

Last month FTAdviser reported the watchdog had begun quizzing advisers on their retirement income advice records by sending a number of information requests to randomly selected advice firms

Now the financial regulator has disclosed the scope of its latest probe in response to a Freedom of Information request submitted by FTAdviser, in which it confirmed the letters had been sent to 125 advice firms in January.

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In letters seen by this publication the regulator asked advisers to provide data on clients who are receiving income in retirement, including their age, withdrawal type and amount and provider name. 

The FCA also asked advisers to specify whether the advice was initial or ongoing. 

Advisers received the letters in mid-January and were given a deadline of February 13 to supply the data.

The letters form part of the regulator's fresh crackdown on the advice market it had warned about in a letter sent to advice firms last month.

The sharp focus on retirement income advice suggests the FCA is moving its beady eye away from the defined benefit transfer market and towards the potential conflict of interest created in retirement income advice, experts have warned.

It is understood the regulator will look at the root causes of poor advice throughout the suitability review and it is working from the starting point that poorly managed conflicts of interest can result in consumer harm.

Part of the FCA’s suitability review will be about ascertaining whether conflicts of interest were a fundamental, real issue in the retirement income advice market, particularly for firms who are looking to sell.

The regulator said in its Sector View in February it was concerned the growing trend of consolidation in the market was incentivising advisers to recommend products with ongoing fees, when they might not be suitable, in a bid to boost revenue streams., additional reporting by Imogen Tew

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