UK wealth sector faces £3.8m in penalties amidst new regulations


The UK wealth management sector has faced significant financial repercussions this year, accumulating £3.8m in fines from the FCA.

According to Oxford Risk, this sum represents approximately 7% of the FCA’s total fines of £52.8m for the year. The data, obtained through a Freedom of Information request by behavioural finance experts Oxford Risk, reveals a concerning trend in the industry.

Since 2019, the adviser, intermediary, platform, and wealth management categories have collectively paid £36.7m in fines, with 2022 marking the peak year at £21.8m. Oxford Risk underscores the critical nature of the new FCA Consumer Duty rules, which mandate a deeper understanding of behavioural biases and consumer vulnerabilities. Non-compliance could exacerbate the already rising trend in fines.

Oxford Risk emphasizes the importance of wealth managers employing advanced tools to mitigate the risk of fines and enhance customer outcomes. James Pereira-Stubbs, Chief Client Officer at Oxford Risk, expressed disappointment over the £3.8m fines and highlighted the potential for further increases due to the new Consumer Duty rules. He advocates for wealth managers to comprehensively document behavioural biases and risk tolerance as part of their suitability systems.

Oxford Risk’s behavioural tools, which assess financial personality and preferences, play a pivotal role in building a comprehensive investor profile. These tools, capable of measuring up to 20 distinct dimensions, including sustainable investing preferences, are vital for aiding investors in understanding and managing their financial attitudes and emotions.

Oxford Risk Chief Client Officer James Pereira-Stubbs said, “The wealth management sector including advisers and intermediaries and platforms works hard to deliver good customer outcomes, so it is disappointing to see as much as £3.8 million paid out in fines.

“The worry is that the introduction of Consumer Duty could lead to the level of fines rising even further and the issue is that very often the fines and damage to consumer outcomes are entirely avoidable if wealth managers make use of the tools and solutions that are available. Wealth managers need to document behavioural biases and risk tolerance as part of their suitability systems and processes and crucially need to understand how to act upon the information to ensure good customer outcomes.”

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