The Financial Conduct Authority’s (FCA’s) expectations may be “potentially unachievable” as the “bar is set too high”, according to Pinsent Masons senior associate Michael Ruck.
This week, the FCA announced it had uncovered widespread failings related to firms’ financial promotions.
The regulator’s position is that all promotions must be “clear, fair and not misleading” as they may be consumers’ main or only source of information they base their decisions on.
But Ruck, who spent years as an advanced associate lawyer in the enforcement division of the Financial Services Authority, which was replaced by the FCA in April last year, said some firms are unclear on what the FCA expects.
“The vast majority of firms are trying to meet the standards set… [and], although the FCA will continue to seek to raise standards, it must retain an understanding of what is achievable for those in the industry,” he said.
“We are seeing a move by the FCA to set the bar in various areas to a potentially unachievable height.”
Firing line
Ruck warned all financial services firms should consider themselves in the FCA’s sights when it comes to financial promotions.
Advisers could be implicated by the regulator’s ongoing assessments of sales of unregulated collective investment schemes and other complex products, such as contingent convertible securities (CoCos), which are “still clearly an issue”, Ruck suggested.
The FCA temporarily banned the sale of CoCos to the mass market earlier this month, saying it did not think they were widely suitable yet might appeal in a low interest rate environment.
Ruck said: “Advisers can take some comfort from the fact there are certain products being taken out of the market full stop.”
