Our FAMR SRI recommendations

On 22 December 2015, which now feels like a rather long while ago, sriServices submitted a paper in response to the FCA’s Financial Advice Markets Review consultation request.

Our response focused on the desirability of bringing values based and SRI related issues into the financial advice process as a matter of course.

To précis – we submitted a lengthy document (following discussions with a small number of our partners) made up of an initial letter and a response to the specific questions posed.

Our response included comments relating to the need to include values based / SRI considerations into the advice process in order to ensure recommended solutions were ‘suitable’ for clients; the reputation damage to our sector that relates to the failure to always do so;  how this area works in other investment markets; the risks associated with ignoring such issues …  and a few recommendations.

Our recommendations were as follows:

•   The FCA should recognise that the failure to integrate ‘environmental, social, ethical and faith related issues’ into the advice process is detrimental to the reputation of the financial services sector and also potentially to client outcomes
•  The FCA should take the view that a broad interpretation of ‘potentially appropriate SRI outcomes’ is desirable. Some will focus on ethical issues but many others will relate to themes, risk mitigation or seeking out opportunities that relate to an investors views or lifestyle. (I set out the range of ‘SRI Styles’ that now exist for ‘regular’, regulated, retail, onshore collectives on my database tool staging.fundecomarket.co.uk). 
•    The FCA should direct advisers / distributors to include an understanding of an investor’s personal values based aims and objectives within the ‘suitability’ requirements -irrespective of the advice model used.
•  Advisers and others should be directed to record their findings in order to protect against future complaints.