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FSA fights back against EU’s adviser charging plans for KIDs

by Michelle Abrego on Feb 18, 2013 at 10:02

FSA fights back against EU’s adviser charging plans for KIDs

The Financial Services Authority (FSA) is battling the European Commission over plans to force product providers to include information about adviser charging on key information documents (KIDs).

The UK regulator is fighting the proposal on the grounds that it links advice with a product in a way that runs counter to the spirit of the retail distribution review (RDR), according to Matt Connell (pictured), Zurich principal for government and industry affairs.

In December the commission’s latest draft regulation on packaged retail investment products proposed that KIDs should include the cost of advice as well as the product details they already carried. The FSA went to Brussels to give evidence in January.

‘The spirit of the RDR is very much about splitting advice from the product,’ said Connell. ‘Putting information about adviser remuneration in a document that’s about a product the customer is getting sends a difficult message to consumers.’

He added: ‘You have advisers giving information about their services at different times [of the advice process], so putting everything together into one document doesn’t make sense from the customer’s point of view.’

10 comments so far. Why not have your say?

Duncan Carter 2

Feb 18, 2013 at 10:33

It's just a thought but how much money is being spent on this spat between two regulatory bodies, each with disparate agendas and in reality how much difference will it actually make.

I'm sure it's a beautifully intellectual exercise but hey!

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Jonathan Kirby

Feb 18, 2013 at 10:35

Well, they were told to wait until the EU rules came in but no, in their normal 'we no best' gung-ho fashion they said that they had consulted and nothing in the EU rules was against their proposals.

Now that we have the ludicrous situation of un-advised sales containing commission abut advised sales having to show everything separately, the waters are actually more muddied than ever.

And waht will be the cost if they have to come in line, how many millions more?

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Julian Stevens

Feb 18, 2013 at 10:48

The provider documentation I've seen (paraphrased) says XYZ Ltd doesn't pay intermediaries, that is a matter between you and your adviser, although XYZ Ltd can facilitate payment of the amount you agree by deduction from the sum you invest into this product. Doesn't that go far enough?

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John Burchett

Feb 18, 2013 at 11:20

The first of many fights that the FSA/FCA will have with the EU.

This was completely avoidable had the FSA not been so arrogant.

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andrew smith

Feb 18, 2013 at 11:32

RDR 2 here we come!!

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You must be joking

Feb 18, 2013 at 12:53

In the words of Al Murray "Back off, Brussels!".

The EU proposals will make KIIDs even more useless and misleading than they already are.

We already have to explain to clients why the initial charge quoted in the KIID isn't correct... which is laughable.

How are the companies concerned (investment houses) supposed to know what the advice charge is?

In all honesty, it is nothing to do with them... and just thinking about our own charging structures the "advice charge" could be anything from 0% to 0.75% per annum depending upon the agreed ongoing service/investment proposaition.


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Julian Stevens

Feb 18, 2013 at 13:04

As I read this article, KID's are not the same thing as KIID's. But involving providers in the issue of adviser charging is completely stupid ~ even the FSA appears to be able to see this!

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You must be joking

Feb 18, 2013 at 13:10

@ Julian

I understand that KIDs are to be the replacement for KIIDs, a sort of KIIDs take 2!

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Julian Stevens

Feb 18, 2013 at 13:44

Uhh, what do I know? I'm so blitzed and punch-drunk with all these changes (as are most clients who are paying any attention) that it's all but impossible to keep abreast of it all any more.

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Richard Hardy

Feb 20, 2013 at 14:48

Another bloody shambles!

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