Regulator plans second wealth manager probe

Michael Bow
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THE FINANCIAL Services Authority yesterday ramped up its probe into wealth management firms by announcing a second investigation into the investment practices of more firms.

The review, which will fall under the auspices of the newly created Financial Conduct Authority when it comes to report next year, follows an initial investigation in June 2011 into the way portfolios were managed for retail clients.

The new probe will build on the original study, which identified “significant, widespread failings” in the wealth management industry.

The FSA said it would examine whether firms had heeded the warnings it sent last year when it wrote to wealth management company chief executives telling them to root out bad practice in executing client mandates.

Details of the firms involved in the new sample are confidential but it is understood the FSA is looking at a smaller number of larger-sized wealth managers in this new round of work. The original study involved a sample of 16 firms in total.

The FSA said the work will involve the direct assessment of firms’ systems and controls to make sure clients were invested in the correct assets.

The results are set to be published early next year.

The new FCA is set to be led by current FSA managing director Martin Wheatley.