The Financial Conduct Authority (FCA) has called on all firms and advisers to report any “potential suspicious activity”, as it dismisses views it takes too long to deal with problems.
The UK regulator has come under fire for its work on the recent mini-bond ban, as well as its reactive approach to the British Steel Pension Scheme scandal and phoenixing.
Debbie Gupta, the FCA’s director of life insurance and financial advice supervision, said at Dynamic Planner’s conference in London: “I often reply, when people say the FCA is slow to act, [that] we’re not necessarily slow.
“We’re just thoughtful, deliberate and careful. That is absolutely the right way to respond to the challenges and produce considered, thorough and balanced work.
“I know that can be a frustration sometimes. But it’s really important that we take care in how we work, ensure that firms have time to respond and engage with what we are trying to change, and that we only operate within the powers available to us.
“If that takes time, then so be it. But our focus on consumers is unwavering.”
Whistleblowing
Whistleblowers are a great resource for the UK regulator and it has, again, asked the advice industry for help to deal with its big “pension scam” and “non-standard high-risk investment” concerns.
But International Adviser recently wrote a feature on whistleblowing, where an adviser said it can be seen as a “fruitless exercise”.
“We value information about any potential suspicious activity you come across,” Gupta added. “This is really important.
“If you think a firm or individual is involved in wrongdoing, we do ask you to report it to our firm inquiries team, either by telephone or email. It’s relatively easy. We need to tackle this culture of looking away.
“[Advisers] know better than anyone else in your sector. And if there are people or firms behaving badly, doing the wrong thing, then they damage all of us.”
Who to watch
Gupta also said during the conference attended by IA that the FCA has identified a number of factors contributing to pension scams and non-standard high-risk investments, such as the recent London Capital & Finance scandal.
These include:
- “Unauthorised introducers”;
- “Issues where firms are delegating or outsourcing their regulated activities to other firms without carrying out due diligence”; and
- “Principal firms not having enough oversight of their appointed representatives”.
She said that firms need to make sure due diligence processes are “rigorous and robust”.
“It applies to the investments you select for your clients, when recommending other firms’ services, when onboarding any third-party tools,” Gupta added.
“Due diligence is the best defence we have against scams. It protects our clients. It protects the firm from falling foul.”
