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: ‘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.’
Nucleus business development director Barry Neilson said: ‘It’s important to understand that, as your client proposition and the supply chain that delivers it changes, the risk inherent with that also changes.’
Source: Citywire. Read full article here.