Is suitability of advice still under the regulatory spotlight?

We all know that suitability of advice has been a key focal point for the FCA recently. It doesn’t look as though this focus will be changing for some time. The suitability of advice surrounding the transfer of Defined Benefits (DB) schemes is the latest to come under the spotlight.

Since the pension freedoms came into force the number of new customers approaching advisers to transfer from a DB to a Defined Contribution (DC) scheme tripled, according to FCA data released in April 2016.

The FCA apparently collected a sample of client files from advice firms at the end of last year, in order to carry out a review of DB transfer advice.

One of the firms asked to provide a sample of client files was visited by the regulator at the start of the year. It received verbal feedback and key issues that had been identified where highlighted. The firm also received suitability feedback following the visit.

A wider review of advice suitability was launched in April this year, with around 700 advisers being asked to submit all personal recommendations made throughout 2015. The deadline for this was the 3rd May, and the FCA has already made client file requests to a number of firms based on the initial information. The information request stated that it would look to request specific files either in May or June.

However, after just over two weeks with the data, it looks as though requests have already started to be made. At least one firm has been asked to provide the regulator with details of a DB transfer case file, and a state pension top up case.

The FCA is making continued effort to put suitability of advice at the forefront of people’s minds. Therefore, it is crucial that you can evidence the suitability of your advice, and make sure your files meet the regulators expectations.

FSTP

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