FINANCIAL advisory firms are still flouting recommendations designed to clarify how much people pay for advice, the City regulator has said.
New guidelines under the retail distribution review (RDR) introduced six months ago were meant to clean up opaque charging structures for retail punters.
The Financial Conduct Authority yesterday said some firms were ignoring guidelines and putting charges as percentages rather than as pounds and pence in documents sent to retail investors.
A number of advisers are also referring to themselves as so-called independent advisers – which have a wider remit to offer different funds – when they are restricted to the types of funds they could offer.
The FCA’s Clive Adamson said the findings presented an “early snapshot” of how RDR had changed the sector. The watchdog has responded to the findings by sending a factsheet to 6,000 advisory firms to see if the shortfalls apply to them.
“The thematic review shows more needs to be done so consumers really engage with the process,” Deloitte RDR partner Andrew Power said. “But this is a continuous change that is going to take place over years.”
Under the guidelines, advisory firms must state their charges in writing. Putting them in cash terms is not mandatory, but recommended by the FCA.
“RDR has been a long road with considerable consultations along the way, so it is somewhat surprising that this is now a concern. There is nothing in the rules to say that charges have to be described in cash terms,” Hargreaves Lansdown’s Danny Cox said. “Percentages work well particularly when there may be a change in the amount invested.”