Suitability – regulatory focus in 2020

Dear CEO, FCA, Financial Services regulation, Suitability, Suitability of advice

The FCA has released a Dear CEO letter looking at the suitability of advice being provided by financial advisors. This is because the ongoing suitability failings by financial advisers are causing ‘significant harm to consumers’ financial well-being’ ahead of a major review of the market following the retail distribution review (RDR) reforms.

The letter outlines the key areas of concern that the FCA has ahead of the second major review of suitability following the RDR reforms at the beginning of the last decade. They have also summarised the actions that they expect firms to be undertaking.

  • Assessing suitability of advice and disclosure
  • Defined benefit pension transfer advice
  • Pensions and investment scams
  • Adequate financial resources and professional indemnity insurance
  • Ban on promotion of speculative mini-bonds to retail consumers
  • Senior Managers and Certification Regime
  • EU Withdrawal

In its first review, published in 2017, the regulator concluded the sector was broadly working well, with 90% of advice being appropriate. The FCA said it intends to publish its conclusions on this upcoming review by the end of the year.

Click on the image to be taken to the letter in full on the FCA website.

Stuart Bull

Marketing Manager