Tougher disclosure on menu for UK advisers
THE UK financial services regulator, the Financial Services Authority (FSA), has proposed a radical new disclosure regime for financial advisers to allow UK consumers to more easily compare the charges and services they are being offered.
The proposals, part of a consultation paper released by the FSA last week, call for all independent financial advisers to make available so-called ‘menu’ documents, which would be provided to consumers in the early stages of the sales process outlining the services the adviser is offering and their cost.
The proposals are in line with the FSA’s push to move the planning industry in the UK towards a system of open architecture similar to that in Australia, breaking down barriers between independent and tied agents and allowing businesses to cross-sell products.
The FSA says the menu system aims to reduce the potential for commission bias, make consumers more aware of the cost of advice and facilitate shopping around by consumers.
“It will ensure that the form and level of adviser remuneration is signalled to the consumer ‘up front’,” FSA head of retail projects David Severn says.
The menu document will also outline to clients how they can either pay for advice through an up-front fee, or through ongoing commissions, with the rate of commission the adviser normally charges set alongside average rates charged in the market on the document.
The FSA is also aiming to develop ways of applying the menu approach across all advice channels, not just the independent adviser sector.
“We want to help consumers be more confident about the advice they are receiving, to know what they’re getting for their money and compare one adviser with another,” Severn says.
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