FCA proposes 'polluter pays' investment advice redress framework
The FCA said the proposals mean firms will be required to set aside capital so that they can cover compensation costs and 'ensuring the polluter pays when consumers are harmed'.
The regulator set out its plans in a consultation paper, «Capital deduction for redress: personal investment firms», and a Dear CEO letter today (29 November).
It said the proposals mean firms will be required to set aside capital so that they can cover compensation costs and «ensuring the polluter pays when consumers are harmed».
It explained the plans would mean personal investment firms — otherwise known as investment advisers — would need to calculate their potential redress liabilities «at an early stage», then set aside enough capital to meet them and «report potential redress liabilities to the FCA».
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It added that any firm not holding enough capital would be subject to «automatic asset retention rules to prevent them from disposing of their assets».
FCA executive director of markets and international Sarah Pritchard said: «We want to see a thriving financial advice market to make sure consumers can access the support they need from financially resilient advice firms that want to do the right thing. Diligent advisers are having to compensate through the levy for the bad advice of their failed competitors. That needs to change. It is important that the polluter pays.
»We want to hear from industry and consumer groups on our proposals. Please do let us know what you think so that we can reform the way the current framework operates to ensure that those polluting the sector pay."
The FCA pointed out that the Financial Services
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