Swaines

FSA has issued guidance to improve standards of investment advice

Dawn — Wed, 09 May 2012 09:11:45 +0000

The FSA has carried out a review of how investment advisory firms are changing their business models in preparation for the Retail Distribution Review. In many cases firms are choosing to offer a centralised investment proposition. As a result the FSA has issued guidance to help firms improve the standards by which they are providing investment advice to retail customers.

Although the FSA is being replaced indications are that a potentially tougher supervisory regime is being introduced

Dawn — Wed, 09 May 2012 08:59:17 +0000

In a recent speech the departing CEO, Hector Sants, said that the regulators must have harsher penalties that frighten executives of failed companies and it is vital to raise penalties above the current levels. He repeated a phrase he had used before – ‘people should be very frightened of the FSA’.

The regulator wants to see appropriate corporate governance with boards and senior management displaying the right behaviour, attitude and competence. It will now intervene to prevent unwanted outcomes. He also felt that insufficient progress had been made on the key issue of effective corporate governance. It is possible, therefore, that more focus is placed on the management infrastructure of firms than has previously been the case.

He also warned that the Financial Conduct Authority (FCA) which will take over a large part of the FSA’s duties next year could apply a more rigorous process to giving executives authorisation to take up key roles which will lead to more applicants being rejected. Our experience indicates that there is already a more stringent application process in place.

FSA financial promotions guidance

Mark — Thu, 12 Apr 2012 13:29:40 +0000

The FSA has recently provided guidance on image advertising, past performance for fund managers, advertising ISAs (albeit with only a few days left until the end of the tax year) and advertisements for ‘investment professionals’.

FSA – business and conduct risk

Mark — Thu, 12 Apr 2012 13:26:55 +0000

The FSA has set out the areas that it sees as high risk over the coming year and that it expects firms to pay special attention to. Many of these have been raised previously and have been addressed in Swaines’ previous news bulletins. However, it is important to understand the issues that the FSA continue to regard as presenting a risk.

Treatment of Legacy Assets

Mark — Wed, 07 Mar 2012 11:34:39 +0000

The FSA published final guidance on how firms should treat legacy assets following previous consultation. Legacy assets are retail investment products purchased by a client before the RDR rules come into effect and which the client will still hold when the rules are in force. The guidance will come into force on 31 December 2012.

Independent versus Restricted Advice

Mark — Wed, 07 Mar 2012 11:29:22 +0000

The FSA has issued further guidance on independent versus restricted advice. From the end of 2012, firms providing investment advice to retail clients will need to describe these services as either ‘independent’ or ‘restricted’.

RDR – adviser charging

Mark — Thu, 02 Feb 2012 10:01:28 +0000

The FSA has issued a consultation paper addressing queries that have arisen on adviser charging. These concern the facilitation of the payment of adviser and consultancy charges by product providers, and the position regarding refunds where a client cancels the product in accordance with the cancellation rights, and payment of the adviser or consultancy charge is being facilitated by the product provider

Attitude to risk

Mark — Thu, 02 Feb 2012 09:58:53 +0000

The FSA continue to find concerns with how advisers are determining a client’s attitude to risk (ATR) and are embarking on a number of road shows to highlight the issues. It is likely ATR procedures will also be reviewed at any near future visits the FSA undertake.

Financial Crime

Mark — Thu, 12 Jan 2012 15:49:51 +0000

The FSA has issued a guide on how it expects firms to apply measures to combat financial crime. The FSA wants the guidance to be applied in a risk-based, proportionate way, taking into account such things as the nature and size of a firm’s business, and that its examples of good practice provide ways, but not the only ways, of meeting its requirements.

RDR Research

Mark — Thu, 12 Jan 2012 15:44:08 +0000

The FSA has commissioned independent research to estimate the size of the retail investment adviser population and measure progress towards the professionalism requirements of RDR. The survey unearthed apparent unresolved questions and gaps in the understanding of the RDR Professionalism requirements that the FSA can, and perhaps should, be a key player in addressing through more effective communications.