While it should be noted the review, the first of three planned by the regulator, was conducted between February and April this year, it does beg the question as to when or whether the FCA will show its teeth on this issue now we are seven months in.
Having identified firms which were in effect flouting the new rules, one wonders why IFAs worried so much in the seemingly never-ending run-up to the implementation of the Retail Distribution Review about making sure they were compliant by 1 January 2013.
International Adviser asked the FCA what the next steps were but the financial watchdog would not be drawn on whether or not it will take action against firms identified as having not fully implemented RDR. A spokesperson also would not give any indication as to in what form this action would be, when or if it did happen.
“The idea of the review was not to identify and take action against firms, but rather to help firms by providing feedback,” said the FCA spokesperson. “The FCA will only take action against firms if the abuse was particularly bad or if changes at the advisory firm were not forthcoming.”
The FCA is due to conduct another review looking at the same aspects of the RDR’s implementation beginning in “the next couple of months”, with a report due to be published early next year – a full 12 months after the RDR was implemented.
Is this too long, given the idea of the new regime is to protect consumers and that it is surely those at the less scrupulous end of the advice market which are currently not in line with the new regime?
The regulator was keen to point out that, while the idea of this review, and the one due to be published in the New Year, was not conducted with a view to taking enforcement action, it would do so if it deemed necessary.
Martin Bamford, managing director of Surrey-based IFA Informed Choice said it’s a shame some companies are claiming independent status when this is not the service they are offering to clients.
“Perhaps until the FCA does instil some fear into the market this will continue to happen,” he added.
Sam Instone, chief executive of London-headquartered AES International agreed: “It is vitally important that the IFA profession continues to pioneer to higher standards. Independence is a key differentiator for clients and firms alike and those which are unable to act in this way should be labelled correctly.”
Another question the report raises is exactly who is responsible for ensuring the new rules are implemented? Will clients know about RDR unless they are specifically informed about the changes and are therefore able to inform the FCA if they are concerned they were offered “tied” advice under an “independent” banner? Probably not.
So, while it is arguably a good thing the FCA has shown restraint so far, a clear statement of intent, maybe a “growl” in the direction of those who are not playing by the new rules, would perhaps not go amiss.
