In a 124-page analysis of risks facing the financial services sector published today, the regulator reveals its concerns about how businesses are adapting to meet the Retail Distribution Review rules, and specifically highlights risks relating to compliance at "stretched" networks.
In the report, the 'Retail Conduct Risk Outlook', the City watchdog states the need to change business models in order to meet the Retail Distribution Review rules will put a strain on advisers’ compliance functions.
As a result, the FSA states it expects some advisers to seek appointed representative status within networks as a way of dealing with the RDR. This, it adds, “will stretch compliance functions in networks, which will also be trying to adapt to the new regulatory regime”.
It says: “Firms should ensure that their systems and controls, including competence of employees, keep pace with any changes in their strategy and business model and with any new services the firm is offering”.
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