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By Huw Jones
LONDON, Jan 21 (Reuters) - 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 has 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," Debbie Gupta, the FCA's
director of financial advice supervision, said in the letter.
"There will be increased focus on these areas as part of our
wider supervision of firms over the next two years."
Mark Turner, managing director of compliance at financial
services firm Duff & Phelps, said it was clear the FCA wanted
advisers to take action immediately.
"This is a far-reaching letter...reminding them of the
important role they play in advising consumers on arguably the
most important and significant financial decisions of their
lives," Turner said.
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.
Lawmakers have said the FCA was too slow in 2017 in stopping
steelworkers in Wales being ripped off by advisers over critical
pension decisions.
"Consumer protection at and in retirement continues to be a
significant challenge for the FCA in the post-pension freedom
world," said Tom McPhail, head of policy at Hargreaves Lansdown,
a funds supermarket.
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 have inadequate
resources and professional indemnity insurance, meaning they may
not be able to compensate customers when things go wrong.
(Reporting by Huw Jones
Editing by Carolyn Cohn and Mark Heinrich)
