On 19 September 2019, the FCA published a speech (delivered on 12 September 2019) given by Debbie Gupta, Director of Life Insurance and Financial Advice Supervision at the FCA on improving the suitability of financial advice.
Ms Gupta states that there are four broad areas of work that the FCA is focusing on: improving standards, targeting firms that cause the most harm, supporting consumers and helping advisers. Advisers play an increasingly important role in the choices people make and the impact of those choices on their quality of later life, Ms Gupta is aware that poor quality advice can’t be easily undone or reversed.
In her speech, Ms Gupta focuses on two specific areas where the FCA has observed that financial advice falls short:
- fact finding and recording clients’ needs and objectives; and
- evidencing the correlation between recommendations and a client’s attitude to risk.
To combat this, Ms Gupta recommends that firms learn more about their clients, understand their circumstances and motivations and then list what this means in practical terms (i.e. capturing and recording essential information including ‘soft facts’). In terms of what firms should not do, Ms Gupta outlines her seven top tips which include not providing templated objectives for the client to tick and to avoid giving advice if a client is unwilling or unable to give all information required. She ends the speech by setting out practical examples of the FCA’s expectations on how firms should be evidencing that the recommendations they make are aligned to their client’s attitude to risk.