The Financial Conduct Authority (FCA) has removed an IFA’s permissions for not having any qualified retail investment advisers working for the firm, the first action of its kind the regulator has taken since the introduction of the Retail Distribution Review (RDR).
The Financial Conduct Authority (FCA) has ordered Catalyst Fund Management to cease advising retail clients on investments.
The FCA noted that Catalyst does not employ any qualified retail investment advisers.
On its introduction on its website Catalyst claims: ‘Catalyst Fund Management & Research Limited is authorised and regulated by the Financial Services Authority to conduct fund management and corporate finance advisory activities. It has been working side by side with its affiliated company, ClearlySo, to conduct regulated activities on behalf of social businesses and enterprises (SBEs) from the ClearlySo network.’
However, in its Supervisory Notice out today, the regulator wrote: ‘In failing to employ qualified retail investment advisers Catalyst’s resources are not appropriate in relation to the regulated activities in relation to the provision of investment advice, except on pension transfers and pension opt outs, to retail customers that Catalyst carries on or seeks to carry on.’
The FCA added that ‘Catalyst has not been open and co-operative in all its dealings with the Authority’ and was in breach of Principle 11 (relations with regulators) of the Authority’s Principles for Businesses, in “failing to respond adequately to communications from the authority requesting that it vary its permission to remove the retail (investment) customer type from its permitted regulated activity of advising on investments”.
It said Catalyst, which was permitted to conduct the regulated activity of advising on investments, had failed to apply to vary its permission despite “repeated requests from the Authority” to do so.
The RDR has made it compulsory for advisers to have relevant minimum qualifications of QCF Level 4 in order to be allowed to carry out retail investment advice.
In its decision, the FCA determined that firms which do not employ qualified retail investment advisers such as Catalyst ‘are therefore posing a risk to the Authority’s operational consumer protection objective’ and so has removed the firm’s permission to advise retail investors – the first such action it has taken so far this year.
‘One of our objectives is to secure an appropriate degree of protection for consumers, which means that we will work to ensure that firms can only offer advice to consumers if they have qualified advisers,’ commented Nick Poyntz-Wright, the FCA’s long-term savings and pensions supervision director.
