FCA will not continue to support IFAs over RDR

The technical specialist for the FCA said the regulator has already been as “clear it can be” on what true independence means, as well as its stance on quoting charges in cash terms and providing details of what annual reviews entail.

Speaking at the Institute of Financial Planning conference in Wales today (1 October), Mr Percival said the majority of advisers were “doing well” to digest the new rules but that numerous firms have “fallen down” on quoting charges in cash terms, both at a generic and individual level.

Commenting on the FCA’s TR13/5 Thematic review into how firms are implementing the RDR, Mr Percival said: “How can the FCA judge what propositions are good value? We take the view that the client is the only one whose judgement matters and that is why disclosure is pre-eminently important.

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“We’ve always said that this review process will go through three cycles. We are now past the supportive stage and saying ‘You’ve had the rules and guidance, now is the time to see if the industry is complying’. We will start taking statistical assessments of the market from this week.”

The suggestion of a tougher approach came as the FCA issued a questionnaire this week to 120 advisory firms as part of its on-going review of the sector. Mr Percival said the FCA would publish the findings of that research “in due course”.

On the issue of independence, he said that the FCA was happy with the “vast majority” of advisers’ propositions but that it had spoken to a couple of firms who acknowledged they were operating outside the regulatory parameters.

Mr Percival also said that advisers needed to provide “much more detail” about what was in annual reviews. He added that commentary surrounding chief executive Martin Wheatley’s warnings over percentage charging had “missed the point”.

He said: “Mr Wheatley was not discussing percentage charging in isolation but on a contingency basis, which has the potential for dealing bias. We want firms to be conscious of this and take measures to mitigate the risk of that bias.”