FCA Investigates Activities Of Unauthorised Pension Introducer Firms

mis-sold-investments

The Financial Conduct Authority (FCA) is investigating the activities of several unauthorised pension introducer firms.

The investigation comes following reports that unregulated introducers have been involved in a number of IFA firm failures and Financial Ombudsman Service (FOS) decision notices.

Many IFA firms use lead generators but while there are reputable names that provide clients leads, others are being investigated following accusations of bias and conflicting interests.

Following the retail distribution review (RDR), many IFAs began working with retired advisors who, despite no longer being regulated, could use their soft skills and experience in the profession to find and refer clients to authorised financial planners.

While there are some introducers who are open about their lack of regulation while making it clear to clients that they’re directing them to a suitable financial planner, others are less transparent and even deceptive in their approach.

Regulatory consultants have reported seeing a number of cases where lead generators are failing to make their position clear and are leading clients to believe they’re in a position to offer formal financial advice.

Others are accused of doing little to eliminate conflicts of interest or product bias, with many IFAs working with specific investment companies and taking a commission after recommending a particular firm to a client.

Regulatory consultant Richard Hobbs said: “If you look at it historically, when the RDR came into effect, there were a number of people who didn’t bother taking up the level four qualification on the grounds of age. In principle, there would be nothing wrong with them cutting deals with IFAs, becoming introducers and sharing client lists with someone who did achieve level four.

“There’s no rule against them being paid for that access. But some introducers are stepping across these lines and they can’t do that. “Introducing” in the regulation means exactly what it does in the common dictionary; you can’t advise.”

Leave a Reply

Your email address will not be published. Required fields are marked *