FSA warns IFAs over stress testing post-RDR propositions

07 August 2012

The Financial Services Authority (FSA) has voiced concerns that adviser firms are not stress testing the new propositions they will launch in line with the Retail Distribution Review (RDR).

The FSA said advisers needed to examine the risks their firms and clients were subjected to because of business changes, such as switches to a different platform, using a discretionary fund manager and changes to the charging structure.

Linda Woodall, FSA head of investment intermediaries, said: "Every good business needs to test their propositions and advisory firms are no exception. We are concerned firms are leaving the testing too late or not doing it at all. To ensure a sustainable business model in a post-RDR world, firms must focus on stress testing and contingency planning. This is a key area of our ongoing supervisory work."

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