Former pension minister Baroness Altmann has described the FCA’s overhaul of the Financial Services Register as a “scammer’s charter”, accusing it of diminishing consumer protection and making it harder for trustees to process pension transfers.
Under the Senior Managers and Certification Regime (SM&CR) only designated Senior Managers are pre-approved for most authorised firms. Individual advisers are no longer pre-approved by the FCA. Instead ‘certified individuals’, including financial advisors, will be certified by the firms that they work for and a Senior Manager will be accountable for this. The FCA will publish annually the details of these individuals on the firms’ behalf, who will be expected to attest annually that they are accurate. The current register will therefore not be updated until the end of 2020.
For roles the FCA no longer approves following the extension of the SM&CR, historic records will be maintained on the register.
Altmann is concerned that the new rules make it considerably more complicated to find out if an individual adviser is authorised. Consumers or trustees looking to approve transfers will have to contact a Senior Manager and request confirmation that an individual is authorised rather than simply check the FCA register.
Concerns have also been raised that the FCA does not have clear rules as to how Senior Managers determine which staff need to be authorised individuals and that unscrupulous firms could set up a phone line that confirms their advisers are properly authorised.
Baroness Altmann says: “It is just not logical to introduce a new system, supposedly to reduce harm to consumers, which relies on changing ethos and culture rather than imposing rules – when we know that pension scams and frauds emanate from firms who are not interested in good ethos or culture.
“How will anyone know who is an ‘unregulated introducer’ masquerading as an adviser, or a bona fide adviser? If you can’t rely on what you see in the FCA’s own listing, or you think you can and don’t realise it hasn’t been updated, is this not a scammers charter to make hay during 2019 while there is no proper mechanism for trustees or individuals to rely on for ascertaining whether someone is indeed properly regulated and authorised?
“The FCA seems to have given up on authorising individual advisers – they are focussing on firms and senior management and abandoning consumers for the whole of 2020 to have to rely on the new rules which have not yet been tested or even fully in place.”
An FCA spokesperson says: “Consumers should always check the Register to see if the firm they are dealing with is authorised by us.
“It is the responsibility of senior managers to ensure that the firm assesses the fitness and propriety of certain key staff (such as financial advisors) at least annually. The FCA will hold senior managers and firms to account for doing this effectively.
“If consumers want to check the status of an adviser, they should first check that the firm they work for is authorised and then contact the firm using the contact details on the FCA Register. The firm can let them know about the current status of the advisor. We are making consumers aware of this change when they search the Register.”