Replacement business and CIPs
A review of replacement business and centralised investment propositions is possible. The FSA published a final guidance paper on the subject in July 2012. This paper made it clear that the client needs to be made fully aware of the difference in costs between the contract they are in now and the new contract, including adviser costs, initial and ongoing charges.
Firms must also act in their clients’ interests and not transfer funds into their centralised investment approach purely because it is easier to manage. As more investors are placed onto platforms, this will be a key area the regulator will be examining.
Firms should make sure their clients are put into an ‘informed position’ so they can make an ‘informed decision’ if they want to avoid the regulator classing a file as unsuitable due to non-disclosure.
For firms that conduct a lot of switching business, professional indemnity (PI) insurers will be paying closer attention to how this business is controlled and monitored so premiums may increase further.