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IFA: Clients confused with FSA’s ‘independent’ definition

Alan Lakey says the FSA is wrong to redefine independence as clients do not understand the difference with restricted.

By Donia O'Loughlin | Published Jun 29, 2012 | comments

The Financial Services Authority was wrong to redefine the term ‘independent’ as part of the Retail Distribution Review changes as it will confuse clients, Alan Lakey, partner at Highclere Financial Services told FTAdviser.

Discussing his post-RDR plans with FTAdviser as part of a new Preparing for RDR interview series, Mr Lakey said that after 2012 he will no longer be calling himself ‘independent’ as he does not want to “research, look into or deal with” investments that he currently excludes.

In particular he said that he does not wish to dedicate resources to researching areas such as investment trusts or unregulated collective investment schemes.

In the interview, which will be published later today, Mr Lakey said that while he will be calling himself restricted, he believes that he still falls under the ‘independent’ label and that his clients do not understand the new definitions.

He said: “To be independent you have to look at the whole of market and the whole of the product range, including Ucis and structured products, but most of my clients are over 60 and want low risk investments.

“There are plenty of products here that meet their requirements but because I am not doing this due diligence looking into Ucis etc. I am barred from being independent. It’s a nonsense.

”Now I can no longer call myself independent and I will be restricted. This doesn’t fuss me as what I will be offering to my clients is no different as to what I offer now. I search the market for the best deal and I use pretty much all companies.”

The independent/restricted debate has been raging for some time now. In a previous FTAdviser article, networks offered conflicting interpretations of post-RDR independence rules, with some suggesting that the rules extend beyond the exclusion of esoteric assets while others have argued that IFAs should adopt a “never say never” approach.

Mr Lakey added that as far as he is concerned, “I am independent”.

He said: “Now that might be a conversation that the FSA doesn’t like as they are trying to be precise about these things but the honest truth is that what I have said is 100 per cent spot on.

“So when clients ask me why I have taken the independent financial adviser sign off of your office, well I will say it’s because the FSA decided that.”

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