FCA writes to wealth managers over fraud concerns

By Hope William-Smith & Christine Dawson

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Jun 19, 2019

The FCA has written to wealth managers and stockbrokers saying it plans to tackle firms that enable fraud as one of its top priorities, Money Marketing has learned.

The Dear CEO letter seen by Money Marketing was sent to firms on 13 June and asks them to consider whether their business operations harm the wider industry.

The FCA outlined its definition of harm to include customers’ loss of confidence in the industry, their inability to understand disclosed costs, reduced value of investments due to poor execution process and exposure to fraud.

It says: “This letter sets out our view of the key risks of harm that wealth management and stockbroking firms pose to their customers or the markets in which they operate. You should consider whether your firm presents these risks and consider your strategies for mitigating them.”

The regulator says supervision began in April and will cover a two-year period focusing in on market abuse issues and further concerns around meeting Mifid II disclosure requirements.

The letter says: “We will use a range of data to identify the small number of firms who cause issues. Once identified, we will take appropriate actions with these firms.”

The FCA also used the letter to flag a potential investigation into firms’ compliance with the Senior Managers and Certification Regime, which will come into play on 9 December.

The regulator includes a call for more firms to participate in its STAR initiative to improve transfer processes flagged as part of the platform market study.

The letter says: “We will review the progress made by firms, and the industry, to improve the switching process later this year and again in 2020 if needed.

“We will consider further regulatory action if the efficiency of the switching process does not improve.”

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