The Financial Conduct Authority (FCA) is to launch a new division on 15 July dedicated to monitoring the wealth management and private banking sector.

The wealth management and private banking department will be focused more on the firms’ business models, strategies, culture and front-line processes, rather than on controls. There will be 20 dedicated staff members in the new unit, and divided into two main teams dealing with wealth managers and private banks, invesment managers and stock brokers.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Speaking at the APCIMS compliance conference held in London on 2 July, Clive Adamson, director of supervision of FCA said:

"Essentially, it is a shift from looking at how a firm controls itself to how it runs itself. The reason for this is that we believe these areas are some of the primary drivers of poor behaviours".

"We want to use more judgement; focus less on the minutiae and more on the big issues affecting firms and sectors; and be more orientated towards firms doing the right thing instead of just monitoring compliance with rules", he added.

 

A new hub for firms

Given the complexities of the businesses operating within this industry and confirming further thematic work in this space, Adamson outlined the following key areas for firms to focus on:

  • Considering oversight arrangements to ensure they are suitable for the nature, size and complexity of the firms in question.
  • Recording and keeping up-to-date consumer information in order to ensure their individual portfolios continue to be suitable for them.
  • Identifying and managing conflicts of interest.
  • Delivering the services customers have signed up for, and agreeing upfront the exact nature of the service they will provide and how the customer will pay for this.
  • Ensuring that their customers’ wealth is legitimately acquired.
  • Confirming that portfolios are consistent with customer objectives.
  • Clearly setting out their periodic reports. FCA expects reports to be clear, use appropriate benchmarks and adequately disclose relevant fees.

Adamson stressed the importance of the wealth management industry in the economy and supporting its growth, but saw these challenges in the sector:

  • The adaptation of firms to the new regulatory framework, including the implementation of the Retail Distribution Review, which has resulted in many making adjustments to their business models, as well as having to meet the growing number of European directives; and
  • The increased competition facing firms as more expand into this space, resulting in existing players needing to be clear about their value proposition.
  • The need to adapt to the higher standard regulators globally are looking for in relation to ensuring customers’ wealth is legitimately acquired.

"We want senior management to set a strong tone from the top, translate this into easily understood business practices, and support the right behaviours through performance management, employee development, and reinforcing through reward programmes", Adamson concluded.