A central theme of the Retail Distribution Review was the banning of commission and a requirement that financial advisers operate as either ‘restricted’, where they are only able to recommend certain products and/or providers, or ‘independent’, where they are able to consider all types of retail investment products.
The FCA has now published Thematic Review 14/5: Supervising retail investment advice: delivering independent advice (TR14/5). The focus of TR14/5 is the standard for independent advice to respond to industry’s desire for greater clarification on how to meet the requirements. In particular, TR14/5 includes a number of examples of good and poor practice. The FCA has also produced a video summarising the key issues to provide further clarification.
In TR14/5, the FCA reports that it found a significant number of firms appeared to understand the new requirements and that there were no indications that these firms were acting in any way other than independently in practice.
The FCA states that all independent firms should read TR14/5 and the following publications to be sure that they are meeting the independence requirements:
- Finalised Guidance 12/15: Retail Distribution Review: independent and restricted advice;
- Thematic Review 13/5: Supervising retail investment advice: how firms are implementing the RDR; and
- FCA factsheet 007: disclosing your firm’s charges and services.
The rules themselves are covered in COBS 6.2A.
View Thematic review 14/5: Supervising retail investment advice: delivering independent advice, 20 March 2014