The Financial Conduct Authority (FCA) has warned over high levels of debt and conflicts of interest following a review of consolidation in the financial advice and wealth management sectors.
In its review findings, published today, the regulator raised concerns over the fact that many financial advice consolidators fund their acquisitions with high levels of debt. It said it had found cases where the parent company relied on the profits or cash reserves of regulated advice firms in the group to service the debt.
It also warned that incentives for sellers or staff to achieve “certain client decisions” presents the potential for conflict of interest, which could lead to client harm, such as “inappropriately placing clients into a…