The FCA has published Finalised Guidance 14/1: Supervising retail investment advice: inducements and conflicts of interest (FG14/1). The FCA has also published a summary of the feedback received to Guidance Consultation 13/5: Supervising retail investment advice: inducements and conflicts of interest.
FG14/1 explains the FCA’s concerns and why certain practices under service or distribution agreements are likely to create conflicts of interest and result in firms not acting in their customers’ best interests. FG14/1 sets out a number of ways, but not the only ways, in which firms can comply with the relevant requirements of the FCA Handbook.
FG14/1 is relevant to all providers of retail investment products to be sold by advisors and any advisory firm providing personal recommendations on retail investment products. It includes those circumstances when payments are made by providers to unregulated third party firms that are for the ultimate benefit of an advisory firm. The guidance outlines that both the provider and the advisory firm are responsible for making sure any payment is compliant with the inducement rules contained within the FCA’s Conduct of Business sourcebook and that they are managing any conflicts fairly. The FCA expects firms to review and, if necessary, revise their existing agreements in light of FG14/1 within three months of its publication.
View Summary of feedback received, 16 January 2014