TCC recently held a well-received webinar entitled ‘What risks remain for firms following the FCA’s ongoing advice review findings?’ to share our house view on the regulator’s latest communication for wealth managers.

TCC’s Chief Product and Chief Commercial Officer, Garry Evans, was joined by our in-house regulatory experts, Gary Maude and David Boyhan.

Catch up now on the first part of the webinar, as they share their understanding of the parameters of the FCA’s ongoing advice review or read the transcript below.

Watch the first part here:

Garry Evans:

Hello and welcome to this TCC webinar covering the results of the ongoing service advice review completed by the FCA and the implications that review has on the wealth management sector. My name is Garry Evans. I am the Chief Product Officer and Chief Commercial Officer for TCC Group. I am joined today by my two colleagues, David Boyhan and Gary Maude, who are very experienced consultants and practitioners in the wealth management sector, and several other financial services sectors – and have been so for many more years than they probably care to admit.

And then, secondly, in order to have a bit of interaction, we’re going to be running some anonymous polls throughout this webinar. We’re really keen to get your views on what the FCA said and how you’ve interpreted it. But I want to reassure you that there is absolutely no way for us to attribute any of your answers to you individually or to your firm. So, these polls truly are anonymous, and you are free to say what you want without any comeback.

And now, the purpose of this webinar is to provide the TCC house view on what that FCA letter from a few weeks ago actually means for you, and what wealth managers now need to do in terms of both BAU checking of ongoing advice services and also what, if anything, needs to happen in terms of a past business review. And I use this term past business review without any of the connotations of Section166 or major redress programmes, simply as a project to review what has happened in the past. You can replace past business review with a term you feel more comfortable with.

For many organisations in the wealth management sector, the FCA’s letter resulted in a massive sigh of relief. And in fact, I’ve heard from some of our contacts that it changed their whole ongoing servicing plan – moving from allocating what was a significant provision in their P&L and setting up projects to change the ongoing processes and look at the historic book, almost to doing nothing.

Now, whilst we believe that the FCA has indicated that it expects the redress population to be quite small, that letter didn’t remove any of the burden of the expectation of doing a past business review. As I’m sure you’re well aware the outcome of the survey data that the FCA requested from the top 22 wealth management firms concluded that only 2% of clients have not been offered an annual review, which we can think of as the kind of true redress population.

A further 15% of clients that either declined to review or are not engaged with offers of a review indicating that potentially they’re in the wrong service, but certainly less likely to require redress. And the vast majority, 83% of clients had a completed annual review process.

Today, we’re going to provide that TCC house view on what you need to do off the back of these findings. But I want to start with a very straightforward poll to gauge how you reacted to those results. So, if you can go and get your mouses ready please, click on how you felt about the results of the survey for poll question one.

Did you think that the the percentages that you ended up getting into the into the three categories were better than you expected, roughly in the region you expected or worse? I’m going to leave this poll up for about 20 seconds to give you a chance to have a little think. Gary, are participants here seem to think it’s better than they expected. What did you think about what the FCA asked and about what it found?

Garry Maude:

Well, I think we were all of the view It was positive. I also believe that if there are compliance and risk professionals on the call, there is some healthy scepticism, potentially about the political climate or about the implicit messages in the FCA’s narrative that make them think this may not have quite gone away as much as some people think. So, some reassurance also for one or two people on the call, about whether or not David and I have relevant experience to give you any feedback.

As well as being consultants over many, many years. we’re both practitioners. So, I’ve been a Compliance Risk Director and CRO at a number of firms. David is ex-regulator, and he’s supervised over 200 firms. And he’s also, still in contact with a number of the colleagues at the FCA who have first-hand knowledge of some of these risks.

So, he particularly is well informed. I want to just remind people about the narrative that was in that FCA update to firms and pretty much verbatim, if you’ll forgive me. They want to know whether firms can evidence – and that’s the key word evidence -that they’ve delivered all the services that are required to deliver as set out in contracts or – and or – required by FCA rules. So immediately, that brings into the equation of contract law as well as Consumer Duty fair value and so on.

It’s kind of a holistic narrative that has to be considered about that. And it’s kind of enough rope to hang yourself, isn’t it really. In the next stage, which is consideration, you should include whether it’s appropriate for you to proactively contact customers to assess if any harm has been caused as a result of any identified problems or failings.

Now, all of those risks that a risk professional might want to look at or different stakeholders want to look at probably can’t be covered in the next 30 minutes. And just to remind some of you, who may have seen or might not have been invited yet, we’ve got a two hour roundtable discussion in London next week at the DAC offices, and we’ll also have DAC speaking from a legal contractual point of view, which may be of help to those who want to explore that side of the fence.

The other thing that struck us at TCC as I’m sure it did, one or two of you guys on the call is that it based that FCA outcome very much on what firms have told it. And it’s kind of a black and white exercise. You have or you have not made contact with customers. And straightaway I’m sure, like me, some of you are thinking that doesn’t mean you’ve done it well. Indeed, some of the work David and I have been doing with firms leaves us to be quite concerned about the reliance on advisor attestation in particular, that feeds into management information and doesn’t seek to explore the quality of aspect of those engagements with client. So I think that’s something we’ll explore more as this forum goes on. And of course, as we all know, if you are going to do something, it has to be a fairly long-term view back to taking the time barred, side of things. So, you’re going back to probably 2018 with whatever you do decide to do, if you do decide to do anything.

So, in summary, before Garry, you continue, what I impart for now is this is a qualitative, outcome by the FCA based on very much a tick box mentality, have you done something. The quality and consistency of what those responding firms have done will differ markedly based on our experience. And therein lies a number of the risks that we need to discuss going forward, I’ll hand back to you.

Garry Evans:

Thanks, Gary.  

Ready to watch the rest of the webinar? You can watch the full 30 minutes below.

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