FCA warns advisers against provider-paid for rugby matches

Added 19th April 2016

The Financial Conduct Authority (FCA) has warned financial advisers in the UK to stop attending hospitality events such as rugby matches, often put on by investment firms looking to sell them products, as it may create conflicts of interest.

FCA warns advisers against provider-paid for rugby matches

In its 2015 thematic review, published on Monday, about benefits provided and received by firms falling under the Markets in Financial Instruments Directive (MiFID) rules, the FCA said that attending events such as concerts, golf and tennis events, were not always in the client’s best interest.

The update comes off the back of the FCA’s finalised guidance on inducements released in January 2014 and has been published "to remind firms of our expectations around the current rules", said the regulator. 

It highlights instances where investment firms are offering compliant services like educational conferences in conjunction with hospitality events – such as playing golf and evening dinners - that are considered non-compliant.

Non-monetary value

The FCA said: "Just because one benefit provided by the firm is designed to enhance the quality of service to a client and is capable of being paid or received without breaching the client's best interest rule does not mean that another benefit (that does not meet these requirements) can be included in or alongside the compliant activity or event."

The body has urged advisers to assess the value of non-monetary benefits to the client and whether the nature or venue or certain activities are appropriate for business meetings.  

The review also criticised how hospitality logs kept by firms did not always record relevant detail or were not always well maintained - a practice the FCA previously mandated to ensure effective monitoring and compliance.

Furthermore, the regulator said that although investment firms were now disclosing the nature of the benefits they provided to advisers, such as training, they were still failing to reveal the value of the benefits, which the FCA describes as "essential" for allowing advisers to decide whether they wanted to go ahead with the investment or seek more detailed information.


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Monira Matin

Senior Reporter

Monira joined International Adviser in March 2016 from Informa Global Markets where she worked as a eurobond reporter for over two years, covering fixed income markets. She has previously held a number of editorial positions covering politics, insurance and technology. Monira has a degree in Journalism and Economics from City University.



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