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FCA clarifies advice definition as it launches consultation

by Danielle Levy on Jul 11, 2014 at 13:16

The announcement comes as the watchdog said it was aware that firms offering retail investments without personal recommendations would like greater clarity on how they can support customers in making informed decisions, increasingly via technology, without stepping over the boundary into providing a personal recommendation.

Following the introduction of the RDR, the financial watchdog noted the introduction of concerns about the availability and accessibility of personal recommendations to some clients. As a result it said it will monitor this through the year, having recently conducted a large scale piece of quantitative customer research, looking at customers’ interactions with the retail investment market before and after the introduction of the RDR.

The research, found that there had been a small shift from sales channels that involved the giving of a personal recommendation to those that did not (2% of the overall research sample had moved). However, there has been a slightly greater move from channels not involving a personal recommendation to those that did, equating to 4% of the overall research sample).

‘This suggests that the picture is far from straightforward,’ the FCA noted.

As a number of newcomers have sought to plug a post-RDR advice gap, the FCA said it wants to ensure that low cost models designed to meet this need deliver good outcomes for clients in a way that is also commercially viable for those who supply the products and services.

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5 comments so far. Why not have your say?

Neil Shillito

Jul 11, 2014 at 13:29

Very, very clear. The ambulance-chasers are going to clean up.

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Philip Milton

Jul 11, 2014 at 13:33

That's interesting - as it suggests that if it is NOT regulated then you don't need to be qualified to provide it as it's not advice. Additionally, if it's not REGULATED then someone can't lodge a complaint with the FOS (or I shoudl say it's outside of the FOS' jurisdiction)!

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ray silvester

Jul 11, 2014 at 13:56

If an adviser (is that the right term?) is not authorised then he/she will be at great risk of giving regulated advice illegally. So surely all advisers/salespeople should be authorised, full stop.

Furthermore if an advisor/salesperson contacts the client then it is most likely he/she is going to give regulated advice. So anyone contacting a client should be authorised and shouldn't be allowed to contact the client if unauthorised.

If a client contacts the investment adviser then it is likely that the adviser could be unauthorised and give only factual advice and not regulated advice.

It all seems quite simple to me but unfortunately where there is money involved the rules & regulations take second place.

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Jul 11, 2014 at 13:56

"the circumstances in which information is provided can make it regulated advice."

"a firm may provide a recommendation in the form of an investment bulletin that is not targeted at individual customers without it constituting a personal recommendation and therefore triggering the suitability requirements. However, this could still amount to regulated advice."


Therein lies the real problem - lack of certainty for regulated firms.

For unregulated firms it's much worse for the client. If the firm strays into regulated advice there is no PI, no FOS and no FSCS.

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ray silvester

Jul 11, 2014 at 14:00

Or, as the article puts it:

...low cost models designed to meet this need deliver good outcomes for clients in a way that is also commercially viable for those who supply the products and services

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