Results of Thematic Review
Following a recent Thematic Review (TR 14/21) the FCA has announced seen evidence of increasing professionalism of the financial advice sector.
Disclosure of services and adviser charges
There has been an improvement in firms’ disclosure of their services and charges though the FCA remains concerned that a significant proportion of firms are still failing to correctly disclose the total cost of ongoing services in cash terms, or not providing an approximation of how long services may take when quoting hourly rates.
In following disclosure rules and explaining services and charges, there is scope for firms to further consider the prominence, clarity and accessibility of disclosures.
Design and delivery of firms’ ongoing services
Consumer research highlighted the importance many consumers place on the ongoing service element of financial advice. A majority of consumers, across different levels of wealth, are satisfied with their ongoing service and its value acts as an important motivator in their decision to pay for financial advice.
The research also suggests that advisers can be more confident about disclosing their charges, as consumers value the peace of mind that comes from their arrangements being looked after and would be unwilling to give this up to avoid the associated cost.
The FCA saw isolated examples of firms receiving an ongoing adviser charge and not providing a genuine service in return.
Complyport View
The FCA will continue to review disclosure of charges and services as part of their routine supervisory work. Firms with the right culture and should have nothing to fear. In our work we find that some firms over complicate disclosure of charges but fail to be clear regarding the nature and delivery of ongoing services. We are able to help, particularly where standard “off the shelf” documents don’t match a particular firm’s approach.
