UK regulator to compel advisers to 'distinguish' independent advice
The financial planning sector in the UK will have to ensure non-independent advice is “distinguishable” for consumers from independent advice by the 2012, according to a final draft report from the UK regulator, the Financial Services Authority (FSA).
The requirement is one of many contained in the final draft of the FSA’s “Retail Distribution Review” (RDR) paper, released this week, prior to its implementation as the Retail Distribution Implementation Program in 2012.
“We expect the distinction to derive from making the nature and scope of services clear for consumers (with non-independent advisers making clear the limitations of their client propositions) and not from any differences in professional standards or remuneration practices,” the FSA said.
Another key proposal of the RDR, which was launched in June 2006, is that any payment for advisory services made through the customer’s product or investment must be funded directly by a matching deduction from that product or investment made at the same time as that payment.
“For customers to understand clearly the different services being provided and to recognise the value of advice, separate disclosure is required of the costs of advisory services from product costs for both independent and non-independent advisory firms,” it said.
The FSA added it “would prefer to go further and not allow providers to play any role in remuneration, but we recognise the legal (particularly European) and practical (e.g, personal taxation) barriers to this at present.”
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