Rip-off fund bosses facing a crackdown

RIP-OFF financial advisers and investment firms are facing a fresh crackdown from the City watchdog.

the Financial Conduct Authority has launched a review into investment platforms used by the public amid concerns fees are too complicated.

in its annual business plan, the FCA also took aim at the asset management industry for overpriced services.

it warned that ‘relatively few’ financial advisers were clear on the prices they charged customers hoping to plan for retirement or make better use of their money.

‘Consumers who take advice may not be getting value for money,’ the regulator said.

‘some advisers may not pay enough attention to value for money when they make personal recommendations to consumers.’

the FCA also found that customers were being pressured into buying products they did not understand. Worse still, firms might give unsuitable advice due to conflicts of interest where they made money if someone bought a product – or just because advisers had ‘insufficient competence’.

investment platforms were another target. these firms allow ordinary savers to put their money into the stock market.

the FCA said it was concerned about ‘complex charging structures’ in the industry and was organising a market study.

it also raised fears over whether the investment tools offered by platforms gave consumers a proper choice. the review might be followed by action to rein in sky-high costs.

FCA bosses also raised fears over the investment managers who are directly responsible for looking after clients’ money and trying to get them a good return.

Managers will typically buy-in services – such as research – on behalf of their customers, and there are fears they are overpaying due to a lack of transparency.

Chris Cummings, head of the investment Association industry body, gave the review a cautious welcome.

But he said: ‘As we move into a post-Brexit world, it is vital that the UK regulatory framework continues to foster a globally competitive environment to set up and run an asset management business.’

FCA chief executive Andrew Bailey pledged to protect vulnerable customers from exploitation.

‘We will prioritise consumers who are unable to exercise choice, or have restricted access to financial services they need, over those who can exercise such choices, whether or not they choose to do so,’ he said.

since Bailey took over last year, there have been reviews into everything from spread-betting firms to the rent-to-own sector.

However, the watchdog continues to be dogged by claims it is stuffed with City insiders who are too close to the firms they regulate. Much of this criticism stems from the survival of chairman John griffith-Jones, a former top partner at KPMg.

He was in a senior role when it audited doomed bank HBos before the financial crisis but has so far resisted calls to resign for the sake of the FCA’s reputation.