FCA takes aim at wealth managers over high-risk and high-fee products
'We continue to see firms charging for services which are not delivered, overtrading on portfolios to generate high transaction fees and providing a product or service which does not align with the needs of consumers.'
In a 'Dear CEO letter' published today (8 November), the regulator said some companies have lost consumers «significant sums» to scams and fraud, and have also played a role in enabling money laundering.
The FCA added that some firms have also exposed consumers to «inappropriately high-risk investments» and provided poor value for products and services.
It highlighted the scale of the sector within the consumer space, with 1.8 million portfolios and 14.3 million stockbroking accounts currently active.
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As a result, Lucy Castledine, director of consumer investments at the FCA, has called on CEOs and leadership teams to invest «significant time» and energy, and if necessary capital, to manage the risks and harms that could and have hit consumers.
She also urged them to resolve the «root cause of these harms», which she said «often arises from ineffective and/or conflicted leadership and governance, combined with ineffective systems and controls».
The regulator stressed that the resolutions should be mindful and encompassing of the recently introduced Consumer Duty, its principles and outcomes.
On the financial crime front, Castledine urged companies to review their systems, compliance mechanisms, risk management and staff training.
When it came to products and services, she said firms will be expected to ensure their consumers «fully understand all aspects of their investment products and services, and that your firm does not
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