Invisible advisers

Prior to the introduction of the Senior Managers and Certification Regime (SM&CR) the Financial Services Register (FS Register) provided an accessible record of regulated firms and the ‘authorised’ individuals within the firm.   It included information on a firm’s senior management, its control staff and customer-facing roles. In particular, all advisers were listed on the Register and that information could be viewed by anyone interested in seeing it. 

For the most part, interested parties would be adviser firms and compliance consultants! The Register was not designed to be a consumer facing resource but determined consumers could, if they wished, at least confirm that an adviser was authorised, see the adviser’s history and what the firm was permitted to advise on. 

Following the extension in December 2019 of the SM&CR to all FCA solo regulated firms, the FS Register now only contains the firm’s details and lists individuals approved for specified Senior Manager roles. Certified individuals, which includes advisers, no longer appear on the FS Register.

When the FCA announced its intention to remove all advisers from the Register, there was widespread criticism from the industry, consumer organisations, press and politicians. The thrust of the criticism was that it would mean that consumers would be unable to check out a potential adviser, even though there is little or no evidence that consumers ever did this in great numbers. This all blew up around the time of the British Steel Pension Transfer saga, and many commentators suggested that the inability to check out advisers would expose consumers to the risk of being scammed, a strange theory since every adviser involved in British Steel would have appeared on the FS Register at the time, had consumers cared to look … which they probably didn’t.

Anyway, the FCA relented and decided that they would create a new consumer friendly means of accessing information on advisers … The Directory! 

You can read more about The Directory here.

That is all to the good, except for the fact that advisers disappeared off the FS Register in December 2019 and will not be viewable on The Directory until December 2020. In the meantime, consumers have virtually no means of checking on advisers. Of greater concern is that Pensions Scheme Trustees and Administrators have lost a means of confirming the validity of advice given to members. Trustees and Administrators have a legal obligation to confirm that members wishing to transfer out of the scheme have received advice from a suitably qualified and authorised (pre SM&CR) adviser regarding any transfer where the value of safeguarded benefits exceeds £30,000.

Changes to transfer process
In response to this information gap, the Pensions Regulator has told pension scheme trustees they will need to carry out extra checks on advisers before allowing a transfer to go ahead.

In an update to its guidance for schemes, issued on 11 November 2019, the regulator stated that trustees will need to contact advice firms to check if the financial adviser listed on a member’s defined benefit transfer documents is employed with them, or alternatively check an appropriate third part directory.

In practice, it is more likely that all checks will be directed to the advisory firm.

Meet the team!
Many firms already include the names and details, and sometimes even a photo, of advisers. If you do not currently do so, it is worth considering adding the names of your firm’s advisers to your website. Not only would this be helpful in the meantime to scheme trustees but it would also allow consumers to gain some background on an adviser they are considering using.

One word of caution. Many firms do not update their website regularly. It merely presents a poor image if the latest item on the ‘News’ page is from four years ago! But it is potentially risky for firms to not update when advisers join or leave as that could expose clients to danger if they rely on the information on the website.

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

ATEB Compliance offers compliance and regulatory advice.

ATEB Suitability provides report writing software for the financial services market.

Our View

Pension Scheme Trustees will require confirmation of qualification of advisers to fulfil their obligations.  The Certificate for Certification Functions will provide the required confirmation in respect of the individual.

If the firm’s website displays details of the advisers and is up to date and accurate, this could be helpful to scheme trustees and potential clients.

Action Required By You

  • Consider adding details of your advisers to your firm’s website, if not already displayed; 
  • Use Connect to ensure your Directory entries are complete in good time before the Directory becomes live;
  • Contact your ATEB Consultant for further assistance with SM&CR or ensuring your Pension Transfer advice processes are compliant.
  • Or contact ATEB direct here.
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About the Author

Technical Manager - Often referred to as the Oracle or the Sage, Alistair has a wealth of financial services experience. He is our go-to Technical Manager and enjoys nothing more than a complicated conundrum. Feel free to test his renowned knowledge by getting in touch.

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