One of the key policies introduced under the RDR was to draw a line between advisers who offer independent advice and those covering a specific segment of the market. This move was expected to see many in the profession lose their beloved IFA moniker, yet one-year down the line it is still difficult to ascertain how many advisers have officially switched to restricted.
Concerns about the impact of advisers advertising their services as restricted has already been widely discussed, including a rant from one adviser at the end of last year bemoaning its “negative” connotations.
But regardless of any debate concerning advisers potentially misadvertising their services to safeguard their reputations, the regulator continued to stand by its decision and urged advisers to be “upfront” about whether the advice they give is independent or restricted.
Despite the FCA’s insistence, however, some advisers are growing frustrated with the regulator’s apparent lack of consistency. One adviser, in particular, that I spoke to recently, who claimed to have worked hard to retain his independent tag after the RDR, voiced his frustration that not even the FCA’s own register made clear whether a firm is independent or restricted.
Instead he said that clients were forced to hunt all over the internet to determine the official status of advice offered, which he found “surprising” given that the FCA was so forceful about the requirement to introduce the policy of correct naming conventions in the first place.
Not having an official register in place that defines each authorised firm’s regulatory status means the responsibility lies with the individual to be honest about the services on offer in conversation with the client.
Conversations aside, there is still stigma surrounding the term restricted, as this same adviser has grown concerned that restricted firms have taken to using “flowery language like impartial or unbiased” as a loophole to describe their restricted status on their website.
When asked to comment on this debate the FCA responded that it is up to the advisers to let the clients know that their correct status as either restricted or independent, and that failure to do represented “breaking the rules”.
An FCA spokesperson then added that there are no plans to create an official register, as doing so would add more regulatory headaches to frustrated advisers and, more importantly, betray their trust.
Such a response is likely to further divide opinion, and aggravate those advisers that have made the effort to prove their independence.