The FCA has published a speech given by Megan Butler, FCA Director of Supervision – Investment, Wholesale and Specialists. The speech is entitled ‘Assessing the value of financial advice’.

Highlights in the speech include:

  • financial advice and investment management is of unprecedented importance to society, now more than ever;
  • the FCA is particularly active in two areas at present: defined benefit to defined contribution transfer advice and high risk investments; and
  • information sharing with industry is vital to the FCA, as the intelligence it receives helps define its work.

The speech also covers MiFID II, touching on the product governance requirements and the new costs and disclosure requirements.

In terms of the new costs and disclosure requirements Megan Butler states that the FCA still has no plans to propose a standardised format for firms’ point of sale or post sale disclosures.

In terms of product governance, Megan Butler states:

“But the new MiFID II product governance requirements will introduce stricter controls in certain areas. A good example being the identification of a so-called ‘negative target market’ – or customers for whom the product is not suitable.

Generally speaking, firms are required to assess their own target markets. Both to ensure board level accountability and to keep a check on whether products are working as intended.

But post-MiFID II, advisers will need to consider, among other things, the rules around information sharing between themselves, as distributors, and the manufacturers. For example, advisers will need to gather information from manufacturers on the products that they intend to advise on. They’ll also need to feed information back to manufacturers, so the manufacturers can review their products.

To support this to-and-fro of information, we think it would be useful for both parties to put pen to paper on contractual provisions for the exchange of data. But I should stress that our intention is to supervise the new provisions in a proportionate way. In other words, we will take into account the nature of the product, the service and the target market.”

View Assessing the value of financial advice, 4 December 2017