UK's FCA warns financial advisers of a two year crackdown
The FCA will focus on consumers’ financial well-being and will review initial and ongoing advice to consumers on taking an income in retirement
The UK’s Financial Conduct Authority (FCA) has told financial advisers that they have two years to stop unsuitable advice, investment scams and excessive fees.
In a letter to heads of financial advice firms it regulates, the UK's watchdog said that the sector has a valuable role to play.
“However, we are seeing an increasing number of cases where the actions of firms are resulting in significant harm to consumers’ financial well-being,” Debbie Gupta, the FCA’s director of financial advice supervision, said in the letter.
He added that there will be “increased focus” on these areas over the next two years.
The FCA said it would review initial and ongoing advice to consumers on taking an income in retirement.
UK consumers have been given “freedoms” to cash in their pensions, meaning that they no longer have to buy a guaranteed income with their retirement savings.
However, this has led to scammers taking advantage of vulnerable customers, and some people being sold unsuitable investment options for their pension savings.
Lawmakers have previously said the FCA was too slow in 2017 in stopping steelworkers in Wales being scammed by advisers over decisions to transfer pensions to suitable firms.
The FCA said it expected advisers “to start from the assumption that a pension transfer is not likely to be suitable for your client”.
It added that some financial advisers don’t have the resources and may not be able to compensate customers when things go wrong.
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