Percival (pictured) dismissed an oft-cited accusation that there are differences in adjudications between the FCA and Financial Ombudsman Service (FOS) as “myths” and “not real”.
However, he acknowledged there was a “need to do something about that” view and admitted the regulator is “conscious” of the issue.
Percival was speaking at an ICAEW Retirement Savings Summit today.
Addressing the concerns of 4 Pump Court barrister Peter Hamilton, who called for firms to be able to access an “independent tribunal” for final decisions in dispute cases, Percival said: “I’m not convinced the incidences of differences are as significant as often laid out.
“When I talk to individuals about cases where they supported that view of difference, actually the difference wasn’t necessarily there. People can interpret adjudications in particular circumstances that are relevant for [a particular] client, then take a wider view of the issue based on other clients where that particular issue doesn’t apply.
“There is a potential for a myth to build up somewhat, and I’m unconvinced this is an issue in reality as much as it is in perception.”
Suitability reports
Percival also told delegates the notion that suitability reports need to be “really long” was incorrect.
“With the exception of some more complex areas, there are three things and three things only that need to be in [suitability reports],” he said.
“One is: ‘what are the client’s objectives?’; secondly: ‘why is the recommendation suitable?’; and thirdly: ‘what could be the disadvantages?’.”
He added the FCA often sees reports that are long, repetitive and poorly structured and are written for the firm’s purposes rather than trying to communicate effectively with the clients.
He suggested firms stand a better chance at winning a FOS ruling if the reports are demonstrably personalised.
He said: “If you are writing a letter that’s clearly personalised to the individual client, setting out what you are trying to achieve, and why it is suitable, that is going to be contemporaneous and quite personal information that the adjudicator is going to look at and take a view of.
“Whereas a lot of adjudicators are getting reports that are quite generic and not particularly personal to the individual – it’s easier for an adjudicator to [side] with the client where those letters are not personal than in cases where they are.”
Earlier in the day he outlined the scope of the FCA’s upcoming thematic review of adviser due diligence.
