City’s watchdog defends new rules in financial advice sector
FINANCIAL advisers are increasingly independent and more likely to work on the customer’s behalf as a result of controversial rules brought in last year, the Financial Conduct Authority (FCA) said yesterday.
The retail distribution review (RDR) has been criticised for wiping out much of the advice sector by stopping advisers taking commission on products.
As a result many high street banks and other firms stopped advising clients with investments of below £50,000.
However, the FCA’s review of the new regime argues the quality of advice has improved.
“A significant number of firms appear to understand the new requirements and there were no indications that these firms were acting in any way other than independently in practice,” said the FCA’s review.
However, it did find some examples of bad practice and of firms who are unable to offer sound advice.
As a result it issued new guidance to the sector.
It includes examples of poor practice, including firms who could not understand structured products and so would not advise on them, and companies which had no referral process in place to help clients whose needs they could not meet directly.