Brokers Fail To Put Customers First, Says FCA

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Share dealers are failing to consider the best interests of customers when trading shares, commodities and fixed income financial products, says the Financial Conduct Authority (FCA).

FCA investigators looked at 36 banks and wealth managers and how they handled best execution for customers.

The review found most flouted FCA rules and lacked clear policies and management supervision in trading customer investments.

The result was that customers were paying more to execute trades than was necessary in many cases.

David Lawton, FCA director of markets, said: “What the review shows us is many firms are not making customer interests a priority.

Booking.com

“This is not acceptable as they are showing a lack of integrity and stifling competition.

Conflicts of interest

“We expect them to treat customers better and not only ensure they are receiving the right investment returns, but to show they are managing customer costs involved in trades.

“Investors need to keep an eye on this and the FCA will be monitoring the market to make sure firms maintain standards.”

The inquiry also showed many firms had no member of staff responsible for monitoring cost control for customers.

They also failed to manage conflicts of interest with third parties involved in trades and generally failed to understand their obligations to customers.

“In four cases, rules were not applied properly and many firms often tried to limit their obligations to clients,” said Lawton.

He explained the main failing was firms focused on investment outcomes for clients rather than controlling costs.

“This is something we will be looking into further and firms who are not looking at outing their customers first should heed this warning,” said Lawton.

Warnings about bogus advisers

Dealing with an unregulated firm

If you buy shares, save money or invest with an unregulated firm, you lose any protection offered by the Financial Ombudsman and the Financial Services Compensation Scheme. Broadly, you have no independent place to complain if the deal goes wrong and are unlikely to win any compensation.

Checking if a firm is regulated

Go to the Financial Services Register to check if a firm is regulated in the UK.

Reporting a suspected bogus adviser

Find out how to report unauthorised advisers on the FCA web site

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