The Financial Services Authority (FSA) will not take enforcement action against advisers for the first six months of 2013 in relation to its thematic reviews into professionalism, charging structures, independence and non-advised sales.
Earlier this month, New Model Adviser® revealed that the regulator will conduct four thematic reviews in three cycles this year to monitor that advisers are adhering to the retail distribution review (RDR).
The regulator has moved to reassure advisers that it will not take enforcement action over confusion it uncovers when conducting the first cycle of thematic reviews.
However, where the regulator discovers a firm deliberately flouting the RDR rules, for example by giving advice without the proper qualifications or continuing to take commission, during the course of normal supervision or the thematic reviews, it would take action, a spokeswoman for the FSA said.
She said: ‘We don’t intend on taking enforcement action in the first cycle of the thematic reviews, the first six months, unless we find some really egregious practices.’
After each cycle, the FSA will publish guidance and examples of good and bad practice.
‘If at that point we find people aren’t taking note then we might come down slightly harder, but we understand that this year people are adjusting to the new market conditions, the new labels, and we want to help, not just run in heavy handed,’ said the spokeswoman.
In an effort to help advisers understand the new rules, the FSA plans to publish a series of Q&As featuring answers to IFAs’ most commonly asked questions. The first of these was published last week, answering questions on independent and restricted advice, adviser charging and professionalism.
Despite the FSA publishing its final guidance on independence and restricted advice in August 2012, advisers and lawyers have raised concerns that the rules lack clarity and could be misinterpreted.
Peter Williams (pictured above), non-executive director of network Beaufort Group, said the firm had U-turned on becoming ‘restricted whole of market’ and would remain independent, but still had concerns over the label.
‘They [the FSA] have softened their approach and, provided they’re going to be pragmatic, we don’t have a problem being independent,’ he said. ‘But it’s all about interpretation and if we see the FSA changes its view, we will have to re-evaluate our position.’
Alison Potter, a barrister at 4 Pump Court, said the FSA’s guidance on independence was too high level and could be difficult to enforce if tested.
‘It’s going to be interesting to see how the regulator enforces independence,’ she said. ‘At some stage, I imagine, it will be tested in court.’