THE CITY watchdog yesterday announced guidelines to stop fund providers taking financial advisers to luxury hospitality events over fears it could undermine new rules.
In guidelines published yesterday, the Financial Conduct Authority (FCA) said advisers and providers should make sure hospitality is not “extravagant” and ultimately improve the end service offered to retail investors. “Now it is for firms to make sure any payments are legitimate, are in consumers’ interest and that potential conflicts are well managed,” Clive Adamson, director of supervision at the FCA said. It comes after regulations were introduced last year to ban commissions paid by fund providers to advisers.
The FCA said it found some bad practices were still persisting – including providers paying advisers to secure more sales – despite the introduction of the regulations.
It added yesterday that hospitality offered to advisers in some instances was of an “unreasonable value”, which could have influenced advisers in recommending funds to customers.