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Wealth management and private banking firms must put customer first


Rebecca Prestage (pictured), Head of Policy, The Consulting Consortium responds to Clive Adamson’s speech on the FCA’s approach to supervising wealth management and private banking firms…

In previous thematic work, the regulator has found failings and wide spread issues in the wealth management and private banking sector, with firms not able to demonstrate suitability in a number of cases. There is real danger of consumer detriment if these firms do not address the issues that have been identified, and the FCA have subsequently announced a new department to specifically deal with this sector – to come into effect 15 July.

In his speech, the FCA’s Clive Adamson blamed the strategy, culture and front-line processes of firms as some of the primary drivers of poor behaviours. In response, the FCA is moving away from focusing on controls and instead will be looking more at how a firm runs itself, including looking at how the firm makes its money and what the customer actually experiences in practice.

The new business model threshold condition, which enables the FCA to look at a firm’s business as a whole, needs to be met at outset/authorisation stage, as well as on an on-going basis.  It’s all about doing the right thing – not just complying with the rules. Can firms say, hand on heart, that they can demonstrate that they are doing the right thing, for their customers all of the time?

Firms must be absolutely clear about the service and products they are offering their client base, and make sure that they are delivering what they say they will. The FCA will be delving deep into the firms they are supervising to better understand the market and understand fully the end to end process that a customer experiences.

It’s vital that the right corporate culture transcends the entire firm and that senior management set the tone for the rest of their staff. Firms must make sure that they can demonstrate that their business model, strategy and culture puts the customer first. 

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