Compliance Q&A part 3: How should firms be considering quality and suitability of advice?
Recordusure’s Chief Product and Commercial Officer Garry Evans catches up with TCC’s regulatory expert and Technical Director David Boyhan to discuss the FCA’s release of its findings into its recent ongoing advice review.
David specialises in wealth management and helps us unpack what firms should know about the latest FCA’s publications regarding ongoing advice services.
In the third instalment of the five-part mini-series, Garry asks David how firms should be considering the suitability and quality of their advice in relation to the review’s findings. Watch part three now to learn more or read the transcript below.
Watch part three:
Garry
A lot of the focus from the FCA over the past 12 months appears to be on the delivery of the service rather than the quality of the advice that firms give. David, how should firms be considering the kind of quality and suitability of advice being given off the back of this?
David
Well Garry, I think this is a crucial question. And you’re right to mention it because the FCA’s thematic work focussed on whether reviews were taking place or not. It wasn’t a deep dive into the quality of the ongoing service – it was whether it was happening or not. From a Consumer Duty and FCA perspective, it’s always been about demonstrating the suitability of advice.
Historically, the models have always focussed on new business, but the FCA has rightly pointed out firms have moved to a model of providing ongoing advice for up to 90% of their clients. So, it’s crucial that firms are assessing the quality of advice provided in the ongoing review service.
One point the firm should consider is taking a risk-based approach. And I think it’s widely regarded that if you’ve got clients who were having a no change review -after 12 months everything’s identical to the last 12 months – that might be slightly higher risk. You might want to place more emphasis on those clients. But whatever firms do, they need to have a controlled environment that takes into account the quality of the ongoing advice being provided as well.
Watch the full Compliance Q&A video:
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