The Financial Conduct Authority has proposed that investment firms set aside funds to cover the costs of compensating poorly advised clients.
Under the plan outlined, any firm not holding enough capital will be subject to automatic retention rules to prevent them from disposing of their assets.
“We want to see a thriving financial advice market to make sure consumers can access the support they need from financially resilient advice firms that want to do the right thing,” said Sarah Pritchard, the FCA’s of director of markets.
“Diligent advisers are having to compensate through the levy for the bad advice of their failed competitors. That needs to change. It is important that the polluter pays.”