The Financial Conduct Authority (FCA) will require IFAs to report recommendations of risky products as it explores the possibility of introducing risk based levies in future.
The FCA is currently reviewing how the Financial Services Compensation Scheme (FSCS) is funded.
Last year, the FSCS paid out £105 million to clients who invested in 'risky' products through Sipps. Life and pension intermediaries picked up the bill for this as they were asked to pay a £126 million levy.
Following the FCA's annual public meeting in July, chief executive Andrew Bailey said: 'I do regard this cost falling onto other firms directly via the FSCS, and the fact that there isn’t really a risk-based insurance system, as an issue that we are very much engaged with and wrestling with.'
In its consultation on FSCS funding, published in December 2016, the regulator announced it was considering adding a section to advisers’ Gabriel returns, in order to ascertain the necessary data to calculate a risk based levy.
In a board meeting on Thursday, the FCA approved the additional reporting requirements, which are set to come into force on 1 April 2018, with the full details of the proposed FSCS reform due to be published in the coming weeks.
The board also approved an amendment to make Lloyd’s of London contribute to the pool of funding from retail firms, and changing payment arrangements so that some firms can be asked to pay a proportion of the levy on account or be prevented from paying by direct debit.