Research conducted for the Financial Services Consumer Panel alleged that many online investment firms failed to clarify whether they were providing regulated advice or guidance and did not disclose charges in a way that consumers would understand.
Advisers were also alleged to have failed to state whether consumers would have recourse to the Financial Ombudsman Service or the Financial Services Compensation Scheme should things go wrong.
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The panel has now urged the Financial Conduct Authority to strongly enforce existing rules to address these problems, as well as introducing an industry and consumer working group to develop more consumer friendly language.
“More and more people with relatively small amounts of money to invest are turning to online investment services, many of them with cash they have released under pensions freedoms,” explained Sue Lewis, chair of the consumer panel.
“The FCA should enforce its rules in this area vigorously, whether firms are giving regulated advice or not, before more people who can ill afford it lose out.”
The research was conducted for the Panel by Boring Money Ltd.
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