The industry has disagreed with the Financial Conduct Authority's (FCA) decision to hone in on advisers potentially receiving inducements from fund platforms.
Kay Ingram, director of public policy at national advice business LEBC, said most advisers acted in their clients' best interest and would not be seduced by free platform services.
In its platform market study, released on 16 July, the regulator highlighted a number of areas of concern around platform inducements and the resultant conflicts of interest.
The FCA found that some advisers use services, including the provision of some adviser education and training courses, white labelling, and bulk rebalancing and model portfolio management tools, which are likely to benefit advisers but not necessarily their clients.
Some of these services are likely to be so-called non-monetary benefits, so the FCA stated they are likely to be caught by the regulator’s inducement rules.
Advisers were told they need to demonstrate that these benefits are acceptable minor non-monetary benefits, for example because they can enhance the quality of the service to the client and will not impair the firm’s compliance with its duty to act in the client’s best interests.
Ms Ingram said: "I am surprised it is an issue. Anything we receive from anyone we have to declare, and we always act in the best interest of the client."
Paul Stocks, financial services director at Dobson and Hodge in Doncaster, said: "I’m sure some firms use the platform tech as part of their advice processes but whether this is 'bad for the client' is hard to say."
He said he tended to use only live valuation feeds and tax calculations and reporting and did not see the merit in the firm paying for such platform services.
He said: "I’ve said all along, we want a platform to be cost effective, simple and robust – we don’t want any whistles and bells other than the live feeds and tax reporting. I therefore don’t really see the whistles and bells as inducements."
Mr Stocks believes the issue for the regulator is that platforms have charges which incorporate such 'add ons' and if the client is orphaned these services aren’t accessible to them but are still being paid for.
The regulator said in its paper it was concerned about charges levied at orphaned clients and has since revealed it may force platforms to shift clients they suspect are no longer receiving advice to accounts which do not pay an ongoing fee to the adviser.
The Chartered Institute for Securities and Investment, a financial services trade body, which houses the former Institute of Financial Planning, warned that any outright ban on inducements would be bad for the end client.
The CISI said: "Whilst extravagant hospitality gifts and monetary inducements are clearly unacceptable, the banning of inducements outright is likely to have unintended consequences.