The regulator feels advisers should disclose their fees before the client incurs any charges.
While it may not be possible to provide all of the required information on charges at the outset, Chris Hannant, director general of the Association of Professional Financial Advisers, says the FCA expects advisers to provide such information as soon as practical – for example, at the end of the first meeting or very soon thereafter.
The watchdog pushes for advisers to explain their cost in cash terms and to outline their charge “in writing in a durable medium.”
Advisers are also told by the FCA to record the client’s agreement to the specific amount to be charged and how they plan to pay these fees.
Jason Kirk, group head of compliance at SimplyBiz, says: “Clients should be made aware of any charges specific to their own situation before they commit to paying the fee.”
Simon Thomas, head of policy at Tenet Group, recommends including details of charges on the advisory firm’s website, although he added “this is not perhaps as common a practice as might be assumed.”
Mr Thomas says: “Advisers should also be prepared to re-explain this in response to queries raised by the client throughout the relationship.”
