Regulator uncovers inducement bias

Mr Geale said that the FCA is “very alive” to industry concerns in this area, because of the need to make practical changes to distribution strategies.

“We don’t yet know how easy it will be for these tests to be adopted and operated by online distributors – but we do know that firms are unlikely to be able to meet the appropriateness requirements when selling complex products through direct offer financial promotions, meaning that this channel will no longer be available for distributing some products.”

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Finally, he mentioned the fact that for the first time, what it means to provide ‘independent advice’ will be defined across the EU, with Mifid introducing requirements to ensure that independent advisers consider products from a range of different providers before making a recommendation to their clients.

Feedback to the FCA’s recent discussion paper on Mifid will be published next year, with plans being linked to work on the domestic Financial Advice Market Review, which will see proposals published ahead of the March 2016 Budget.

Mr Geale concluded: “If appropriate, we will address any potential overlap when we consult on the retail aspects of implementation – for example, we’ll need to think about how the practical implementation of the new Mifid rules on independence and inducements will fit with any recommendations that the review makes.”