The chairman of the U.K. markets regulator said there is room for improvement in the selection of client investments by wealth managers.
Suitability of investments, the effect of the Retail Distribution Review on the industry and anti-money laundering controls, are three key areas for wealth managers to focus on, John Griffith-Jones, the Financial Conduct Authority’s chairman, said at the Wealth Management Association’s annual conference today.
“The thematic work we have done suggests there is still room for some improvement” in arranging portfolios that meet the needs of clients, Griffith-Jones said. “I would like to see consistent evidence of clients and consumers being placed at the heart of your business models.”
Griffith-Jones said wealth managers’ advice and the execution of client-investment decisions would be watched closely by the FCA. Documents supporting investment decisions should also be available, he said.
The FCA fined a JPMorgan Chase & Co. unit 3 million pounds ($4.8 million) in May for failing to keep up-to-date records on clients, including suitability reports.
The regulator’s chairman also urged wealth managers to fill the “advice gap” left by the introduction of the RDR for consumers seeking financial help. The RDR, which came into effect this year, banned U.K. financial advisers from taking commissions from fund companies to sell their products.