Beware the Unregulated Adviser - how the FCA's Register changes could affect you

Updated: Apr 24

Are you struggling to check a financial adviser's regulatory status? As of December 2019, all details for financial advisers were removed from the FCA Register, meaning that it currently only displays company credentials, rather than an individuals.


There have been changes in the area of regulation affecting financial advisers, and whilst we don't usually want to bore you with 'back-office' rules, this is one that could affect you.


This is especially important at the present time, as ultra-low interest rates and lots of economic uncertainty prove fertile ground for fraudsters and tricksters seeking to part you from your money.


Our primary regulator, the Financial Conduct Authority, has introduced a comprehensive set of new rules known as the Senior Managers & Certification Regime, or SM&CR. This has required all investment firms to map out their management roles and responsibilities in accordance with a template, and in general we think that it is a good thing.


However one little-known result of the changes is that the FCA has removed all client facing details from its online register. Previously it was possible to look up an adviser online by name to check that the adviser was regulated by the FCA, meaning they were held to a legal and ethical standard of practice. The change means that directories, firms, potential clients and other advisers can no longer confirm an individuals credentials from the FCA.


This is expected to last until December 2020, when a new register is rolled out that will fall in line with the new regulations. The Senior Managers & Certification Regime (SM&CR) would see firms creating a stronger structure of responsibility within the business, by appointing select managers to carry out checks previously completed by the FCA.


In a statement, the FCA said: 'Under these proposals, the FCA will only approve the most senior individuals within firms. This means that only Senior Managers will appear on the FS Register. Firms are responsible for assessing the fitness and propriety of their employees and ‘certifying’ certain individuals.'


However, until the new register is rolled out, consumers are unable to check an adviser's regulatory status. Sarah Lyons, chief marketing officer at Parmenion, told New Model Adviser® that this may impact consumers.

'Whilst the introduction of SM&CR is welcomed and should improve clarity of accountability across all regulated businesses, the short-term impact on the Register means that some of the basic checks that we all rely on will not be possible during the next twelve months,’ she said.


Financial advisers have a close relationship with their clients so it’s imperative that potential and current clients feel comfortable knowing an adviser is regulated and held to a high standard.


Checking a financial advisers details until the new register is published


If you're concerned and you want to check a financial adviser's regulatory status, or you're looking for a new financial adviser, here are a few checks you can carry out:


  • Look at online directories such as Unbiased to check the individual is part of a company and to see their credentials.

  • Check the financial adviser's company is on the FCA register online here.

  • Contact the company directly to confirm their adviser's status. Many companies should be able to provide you with a Fit and Proper certificate, which is used to prove the individual's competency under the new SM&CR regulations released by the FCA.


Here at Chesterton House we pride ourselves on being completely transparent at every stage of service. All of our advisers are regulated by the FCA and we can provide a Fit and Proper certificate upon request. Furthermore, we are also a CISI Accredited Financial Planning Firm, which means that we have had to demonstrate a high level of competence and a clear adherence to financial planning principles and practices. Many of our clients have been with us for decades, trusting us to manage, protect and grow their wealth in order to find financial freedom.


Why not give us a call today to find out how we can help you do the same?




Sources:


https://citywire.co.uk/new-model-adviser/news/consumer-impact-fears-as-thousands-of-cf30s-removed-from-fca-register/a1303928?section=new-model-adviser


https://citywire.co.uk/new-model-adviser/news/pru-tells-advisers-to-self-report-after-fca-pulls-plug-on-register/a1309018

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