‘Huge pressure’ from FCA on directly authorised advisers

‘Huge pressure’ from FCA on directly authorised advisers

Directly authorised IFAs have questioned the regulatory approach to vulnerability, claiming they themselves are under growing pressure and stress from the Financial Conduct Authority and from the rising cost of living.

One adviser, Richard Bishop, managing director at PFEP Wealth Management, took to Twitter to say he gets “zero support” as a directly authorised adviser, arguing that many advisers are vulnerable right now.

Bishop said: "The new consumer duty is very different from principle 6 and 7. It is relatively easy for small firms to treat customers fairly, even if the adviser's life may have been impacted by extreme life events.

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“The FCA is not taking into account that small IFAs, (especially single adviser firms of which there are many) are subject to all the drivers of vulnerability the firm's clients may suffer from.”

Speaking to FTAdviser, Bishop questioned what the protocol was for when an adviser is going through a divorce or suffers the bereavement of their life partner.

“If they are extremely vulnerable and make a mistake about the client's vulnerability and the case ends at the ombudsman, does the adviser now have recourse to use vulnerability as a valid excuse?,” he said.

"How can the FCA and Financial Ombudsman Service not accept that an adviser didn't apply the consumer duty correctly to a client, because they themselves were vulnerable? Single advisers can't be vulnerable?"

Bishop argued that in many ways, the FCA makes, or at least contributes to the vulnerability of small firms, through “out of the blue demands for cash to pay Financial Services Compensation Scheme claims”.

“From one year to the next, firms do not know how much their invoice will be,” he said. 

In his tweet, he said he still has to implement plans for 160 clients in case they become vulnerable.

Elsewhere, Greg Neall, chartered financial planner at Wake up your Wealth, said he has also faced some struggles and pressures from the regulator.

Neall told FTAdviser that he recently went through a complaint process against the FCA regarding the process used in forcing him to vary his defined benefit transfer permissions.

“The process was a kangaroo court from start to finish, with nothing more than lip service paid to my objections, and no discretion was ever entertained, let alone applied,” he said.

“My clients were left with vastly less regulatory protection than when the process started and, as an industry-leading adviser in my field [DB transfer advice], the FCA conceded there was zero evidence to suggest I was any risk to the public, or in any way not providing a high standard of advice.”

An FCA spokesperson said: “We understand that the rising cost of living is having an impact on people across the country.

“Advisers unable to keep up with their fees should contact us and we will work with them.”

FTAdviser understands that if advisers are unable to pay their fees, the FCA will look at each case on an individual basis to make sure the right support is provided.