A review by the regulator into disclosure by financial advisers found that 73% of firms failed to provide the necessary information on the cost of advice.
One financial advisory firm and one wealth management firm have already been referred to the FCA’s Enforcement and Financial Crime Division following this review.
The FCA also said too many adviser firms were not clear with customers about the type of service they were able to offer and the on-going services they provide.
The study was conducted as part of the FCA’s ongoing study into the impact of the Retail Distribution Review, which came into force at the start of 2013.
It said many easily solvable issues remain, despite sufficient time and the straightforward nature of the requirements.
For instance, 58% of firms failed to give clients clear upfront generic information on how much their advice might cost while 50% of firms failed to give clients clear confirmation on how much advice would cost them as individuals.
In addition 31% of firms offering a ‘restricted’ service were not being clear they were restricted, or the nature of the restriction.
Whilst failings appear widespread across the industry, wealth managers and private banks performed poorer than other firms in nearly all aspects.
The FCA said if these failings continue consumers could be misled by advisers and added it will consider further regulatory actions if these practices continue until the end of the year.
Clive Adamson, director of supervision at the FCA said: “While we have seen a lot of positive progress and willingness by advisers to adapt to the new environment, I am disappointed with the results of our latest review looking at whether advisers are clear with their customers on costs and services provided.
“We will be helping the industry again to understand our requirements with the release of a video guide but these results are a wake-up call and we expect the industry to respond.”
