FCA say financial advisors are pulling a fast one
A financial advisor's job, is to advise you about your money, and which ways are best to maximise it, right? Well, looks like this might not be the case as it transpires that customers may well be getting misled by around three-quarters of financial advisors who are failing to give the necessary information about the cost of advice.
This is according to the regulator, the Financial Conduct Authority (FCA), who note that new rules say that advisers must quote fees up-front and explain charges to customers.
These reforms are known as the Retail Distribution Review, which also state that advisors and sales staff aren't allowed to be paid commission by the firms whose policies they were flogging and that businesses must be honest about whether they're really independent or restricted to only selling policies from certain financial groups.
The investigation shows that 58% of companies failed to give clear information on the cost of advice, with 50% of advisors not giving clear confirmation of how much advice would cost. Meanwhile, 58% did not explain extra details about charges and 31% of firms sold a restricted range of products without telling the customer. 34% of businesses weren't clear with their explanation about the service they offered for a fee and customers' right to cancel.
Private banks and wealth managers were the worst according to the FCA.
"While we have seen a lot of positive progress and willingness by advisors to adapt to the new environment, I am disappointed with the results of our latest review," said Clive Adamson, director of supervision at the FCA. "These results are a wake-up call and we expect the industry to respond."