FSA: Advisers using DFMs risk 'systemic mis-selling'

The FSA has warned advisers to check mismatches in investment risk when outsourcing to discretionary fund managers.

Speaking at the Defaqto DFM conference, FSA technical specialist Rory Percival (pictured) said failing to check whether an adviser firm and DFM's definitions of "cautious" matched up could lead to "systemic mis-selling". "As an industry, we are very bad at jargon", he said, which as well as leading to a mis-selling risk, was also confusing for clients: "One party may be referring to fixed interest, and another to bonds, even though they are synonymous. The DFM and adviser both have suitability obligations to the client." Percival also cautioned advisers about being "aspirational" when...