The regulator plans to interview several firms as a follow up to its ‘Dear CEO’ letter in June 2011, which identified “significant, widespread failings”, principally around record-keeping and suitability checks.
Individuals will be quizzed to understand the approach their firms have taken to remediate problems identified in their client portfolios, and in particular whether they have been sufficiently rigorous in identifying and dealing with past detriment that consumers may have suffered. Further regulatory action may then be taken if required.
The FSA’s original work gave rise to concerns that there is an unacceptable risk of clients of wealth management firms experiencing unfavourable outcomes. It warned that wealth managers can expect to see continuing and increasing supervisory focus as the failings point to “deficiencies in the management and control architecture” of firms.
The regulator said it will be “acutely interested” in whether firms have heeded the warnings and concerns contained within previous communications, with further updates due in 2013.
