Advisers have welcomed the Financial Conduct Authority's (FCA) first crack-down on an advisory firm which had permissions to advise but no actual qualified advisers, although they say the regulator should have acted sooner.
Panacea Adviser chief executive Derek Bradley said the FCA's announcement that it had removed the advisory permissions of Catalyst Fund Management was welcome but he was surprised it had taken the regulator so long to act.
He suggested that the apparent reluctance of the regulator to strike sooner signaled that the FCA was not as "draconian" as it had led the industry believe.
Firms have been required to abide by Retail Distribution Review (RDR) rules when giving financial advice since the beginning of the year.
This includes all advisers being qualified to QCF Level 4. None of the Catalyst IFAs were qualified.
Bradley said: "Good call FCA, but, why 11 months to make it? Especially if the firm has not been co-operative, this somewhat lengthy timescale does not seem to sit comfortably with advisers and could suggest that the regulator is not as draconian as it would try to suggest."
Ian Rankin financial planning manager John Phillips said he believed some advisers may feel a "bit more nervous" after a regulatory clamp-down on a firm within their industry but "it is more a welcome action rather than anything that people should be complaining about."
He said he had not come across a lot of unauthorised advice so far but added "if it's more widespread than I thought the harder they can clamp-down the better. I'd be quite happy if it stopped completely".
The FCA said it did not believe any unauthorised advice had been given by Catalyst's advisory business, which is a sister company of Catalyst Investment Group, the main distributer of the failed ARM Asset Backed Securities bonds.
But the firm had been uncooperative when the FCA started liaising with it about the removal of their permission, it said.
An FCA spokesperson said: "We haven't come across any examples where customers were continued to be advised by Catalyst [when it did not have any qualified advisers].
"This is an unusual case but we are eager to make sure that people only get advice from qualified advisers, as is part of our rules. If we come across firms that aren't doing that then obviously we'll take action. We take action quite regularly on unauthorised firms. It is something we are aware of, we publish notices as often as we can about firms that are unauthorised and we'll continue to do so."
But the FCA would not confirm whether this was part of a wider investigation into unregulated activities. It said: "It's part of our normal supervisory work to make sure that firms have qualified advisers."
Forty Two Wealth Management principal Alan Dick said he was "happy to hear the FCA are actually taking action where it's required".
He said: "If [Catalyst] wasn't giving advice I don't see how they needed to have permissions. If they were danger of giving advice, but didn't actually have any qualified advisers, then that's clearly a big worry."
Dick explained that sometimes firms keep their permissions for ‘just-in-case' or as a protection for when "you accidentally do something that's construed as giving advice".
His firm recently gave up their mortgage permission after keeping it without giving mortgage advice for a number of years. But he said the difference was his firm still "had the staff available, I was still authorised and able to give advice if I had decided I wanted to".
He added: "The noises that the regulator is making certainly sound encouraging and there seems to be a shift. Whether or not that's borne out in reality only time will tell."
Lisa de-Laune brings over 20 years' industry experience, having led risk, internal control, internal audit and change functions
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