The regulator has published findings from its thematic review of the RDR that state it is “likely to be very rare if possible at all that a firm could use one platform for all clients and meet the independence rule.”
In a 23-page paper published last Thursday, the FCA outlined what it expects from advisers calling themselves independent and warned IFAs that they must consider off-platform investments in addition to the core range of investment products.
The paper stated: “Where a firm has a diverse range of clients, it may be in the firm’s interests as well as the clients’ best interests to use more than one platform.
“Even where the majority of a firm’s clients have similar needs, there are probably going to be outlier clients, which means they may also need to recommend products off-platform.”
Holly Mackay, managing director of The Platforum, said: “The FCA has been pretty consistent on this. Importantly the first question is not which platform to use but does this client need to go on a platform in the first place?
“There is nothing to say you cannot be independent because you just use one platform, as long as advisers can evidence that they start each client meeting with an open mind, consider all products and always focus on individual client suitability.”
Her firm said the wrap platforms including Transact, Nucleus and Novia tend to have a broader range of investments, whereas the old fund supermarkets can have a more limited range.
Cofunds, Skandia or FundsNetwork, for example, have very limited or no exchange-traded funds on offer, while some platforms do not carry investment trusts, according to The Platforum.
Last month Darius McDermott, managing director of Chelsea Financial Services, asked that its platform Cofunds bring investment trusts on to broaden its offering for clients.
Stephen Wynne-Jones, head of marketing at Cofunds, said: “We have nothing to comment on this matter.”
The regulator confirmed that any adviser labelling themselves as independent must “not be restricted by product provider and should objectively consider all types of retail investment products which are capable of meeting the investment needs and objectives of a retail client.”
The final stage of the regulator’s review to ensure firms have acted on the new guidance will begin in the second half of 2014.
The FCA has issued more examples of good and bad practice for advisers calling themselves independent.
The new standard for independent advice is intended to ensure that such advice is genuinely free from bias or any restrictions.
The FCA has said all independent firms should read the report, Supervising Retail Investment Advice: Delivering Independent Advice.
Mike Barrett, platform marketing manager for Skandia, said: “Our researched fund range, part of WealthSelect, is as appropriate for independent advisers as it is for restricted – the key here is what is the most suitable solution based on the client’s circumstances and needs.”
Jon Everill, head of advisory services for FundsNetwork, said: “Platforms are all different, whether in price, product range or the services they offer. That means some will be more suited to certain types of client than others, as may off-platform alternative investments.”