The regulator visited 12 networks and described the overall standards as ‘disappointing’, with four of the 12 firms voluntarily agreeing to suspend AR recruitment until improvements were made to the process.
A spokesperson for the FSA said: “We have seen firms who have not taken up evidence of previous competence and instead simply transferred ARs from other networks. Insufficient checks into the relationships ARs have with other networks can lead to ARs not having Multiple Principal Agreements (MPAs) in place. A MPA must be in place where ARs work for more than one authorised firm, as it is important for responsibility to be allocated if AR customers are to be treated fairly.”
However, the FSA said many firms had adopted a risk-based approach to recruitment and were completing thorough assessments of ARs’ competence.
The regulator pointed out that a network must continually monitor its ARs to ensure standards were maintained.
The regulator continued: “ARs need to be monitored for the quality of advice they are giving and not just the amount of the documentation they are completing. If the quality of advice given is low then remedial action needs to be taken and if no improvement is made, the AR’s contract may need to be terminated.”
Richard Griffiths, managing director of Network Data, said: “There are a number of networks who have cut corners and I’m surprised so many are still in business. The FSA is baring its teeth but it should have bitten someone by now to deliver a message.”
