Britain’s markets watchdog told financial advisers on Tuesday they face a two-year crackdown to stop unsuitable advice, investment scams and excessive fees.
The Financial Conduct Authority (FCA), said in a “Dear CEO” letter to heads of financial advice firms it regulates that the sector had 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.
“There will be increased focus on these areas as part of our wider supervision of firms over the next two years,” Debbie Gupta, the FCA’s director of financial advice supervision, said in the letter.
The FCA said it would review initial and ongoing advice to consumers on taking an income in retirement.
“You need to ensure the advice you provide is suitable, costs and charges are disclosed clearly, and you act in the best interests of your clients,” Gupta said.
Consumers in Britain have been given “freedoms” to cash in their pensions.
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 said that some financial advisers had inadequate resources and professional indemnity insurance, meaning they might not be able to compensate customers when anything went wrong.
Edited by: Abiodun Oluleye/Nyisom Fiyigon Dore