Industry urged to seek dialogue with CMCs

But Dave Penny, managing director at Invest Southwest, said in his experience some CMCs pursued "any commission available" with "little regard for the facts".

He said: "Under the Retail Distribution Review the FCA banned commission for advisers as they believed it created a damaging incentive to do the lucrative thing, as opposed to the right thing. I see a very strong rationale for tight FCA regulation, control and de-authorisation of the many poor firms in the sector."

Mr Richards said the FCA had reached out to the PFS asking for evidence of rogue practices at CMCs following an initial engagement over a specific case and that in less than five days 40 advisers had contacted the trade body with evidence of wrongdoing.

He added: “Financial advisers sign-post the Financial Ombudsman Service to clients who aren’t satisfied with how a complaint has been dealt with. 

“This is the best way to settle a complaint – it costs the consumer nothing and if the ombudsman finds in their favour they get to keep all the compensation rather than have a CMC take a significant chunk of the cash.”

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