NEW RULES for financial advisers may have given rise to incentives to push clients into investing as much as possible, even when it is not in their best interests, watchdog head Martin Wheatley said yesterday.
The Retail Distribution Review (RDR) was designed to remove varying commissions from different products to stop advisers recommending certain investments on the basis of the kickback they receive.
But Financial Conduct Authority head Wheatley said it may have created other perverse incentives.
“RDR takes away the product bias, but not the dealing bias,” Wheatley said.
“If advisers are paid by investments made, they may favour a product sale over advising clients to pay off debts or some other action.
“We will be looking at that.”
The RDR has also had the side effect of making financial advice more expensive, leading to most high street banks closing off standard advice services for all but the wealthiest customers.