“So that is a big wake up call, I'm not sure that has actually really sunk in, because it was buried in the thematic review that people need to look very carefully at cash flow modelling.”
Moss believed the FCA should be requiring anybody who produces a cash flow model to have an MOT test.
“Providers would have to go to somebody independent who would look at their model and say 'is this fit for purpose for financial planning?'.
“At least then advisers will be able to say, 'we have done some due diligence, we've seen the report of the MOT test, we think this is an ok model' because at the moment they're in the blind.
“This is not a criticism of advisers, at the end of the day, they can only use the tools that are available.
"There aren't many income risk questionnaires out there. There's no established methodology for risk rating funds for income and looking at their efficiency, that just doesn't exist. And when it comes to cash flow modelling the assumptions are just hidden,” he added.
alina.khan@ft.com
