The Financial Conduct Authority (FCA) has written to advice firms requesting information about their delivery of services with ongoing charges.
Around 20 of the ‘largest advice firms’ have been contacted. Their selection is not based on any concerns specific to them.
In the survey, the FCA asked if firms have assessed their ongoing fees in the context of the Consumer Duty, and whether they have made any changes as a result.
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The regulator also asked for data on the number of each firm’s clients due for a review of the ongoing suitability, how many received that review and how many paid for ongoing advice but whose fee was refunded as the suitability review did not happen.
The FCA said it will use the responses to assess if more regulatory action in this area should be undertaken.
Mark Polson, founder and chief executive of The Lang Cat, said: “The FCA’s own data shows that 77% of advice sector revenue comes from ongoing fees, so make no mistake, this is a big thing. I’m sure we can all agree that everyone who provides an ongoing professional and valuable service deserves to be paid a fair price for it.
“So, we must also all agree that no customer should be paying an ongoing service charge where no ongoing service is being delivered.
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“Good advisers in well run advice firms have nothing to fear directly here, other than additional costs associated with increased evidence gathering. However, there are shades of Australia’s Royal Commission in this where they uncovered misconduct relating to financial institutions charging customers for services that were not provided and, in some cases, that were never intended to be provided.”
