Regulation  

Majority have adapted to RDR rules, says FCA

The first of three thematic reviews by the regulator into how firms have coped with the implementation of RDR also found for some firms that the distinction between independent and restricted advice remained blurred.

The FCA carried out assessments on a sample of 50 advisory firms between February and April.

While stating that a majority had made progress and demonstrated a willingness to adapt to the new rules, the 14-page review paper also highlighted that a proportion of firms still had further work to do before satisfying the FCA.

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A key area of concern was that many firms were providing charges in percentages, rather than in cash, while some were confusing the issue further by charging for initial advice in cash before imposing an ongoing adviser charge as a percentage of the amount invested.

The report also stated that a lack of clarity existed on what services advisers would be supplying for ongoing fees.

The paper took aim at some firms who were not clear about their service disclosure and claimed they were not being “upfront” on whether they were restricted or independent.

Examples included non-disclosure of the nature of a restriction and firms which were described as independent but only chose products from a limited number of providers or products.

Key points:

• Confusion on charging structures with some firms using a combination of cash and percentages

• Lack of clarity on services provided for ongoing fees

• Confusion on restricted or independent status