In a letter addressed to CEOs of wealth management and stockbroking firms, the FCA said it would be supervising fraud, investment scams and market abuse, best execution, costs and charges disclosures, the senior managers and certification regime (SM&CR) and EU withdrawal.
The letter, from Debbie Gupta, director of life insurance and financial advice, said customers place a great deal of trust in their wealth managers and stockbrokers but in recent years the regulator has taken action against a number of firms which have abused that trust.
“Many of them have used their clients’ portfolios in investment scams or other highly unsuitable investments or to conduct market abuse. Client portfolios must be aligned and managed to the risk profile of the client. We expect firms to ensure suitability and not include high risk investments inappropriately. This remains a priority area for us.”
Woodford and LCF is where the FCA should be focused
But CWC Research founder Clive Waller said this was just another example of the regulator “fiddling while retail investment burns”.
“They have been slow to act over numerous issues such as London Capital & Finance, Woodford, Lloyds/HBOS and RBS scandals. They have not commented on alleged fraud at SJP. Instead of which they are worried about best execution.”
Waller says were it not for Brexit there would be much more noise about these scandals.
The letter said the FCA may take further supervisory and regulatory work into key areas of harm that were identified.
Gupta encouraged firms to contact the FCA’s whistleblowing team about any wrongdoings. She said: “We expect you to review your own costs and charges disclosures to ensure they are satisfying all relevant requirements, including for both ex-ante and ex-post costs and charges disclosures. You should be particularly alert to the need to disclose all transaction and incidental costs and charges to customers.
“These include implicit transaction costs and performance fees. We also remind you that all communications to customers about their Mifid business must be fair, clear and not misleading.”
She also told wealth managers that improving the platform switching process “remained a priority” for the regulator and said it would review progress later this year and in 2020.