UK FSA warns firms not to ‘work around’ commission ban

The UK’s Financial Services Authority (FSA) has written to the CEOs of 24 product provider and advisory firms warning them not to ‘work around’ the country’s Retail Distribution Review (RDR) commission ban.

It is concerned that firms may bypass the adviser charging rules by soliciting or providing payments or benefits.

The UK regulator said its supervisory work had alerted it to moves in the market which “could undermine the RDR adviser charging provisions and also unfairly disadvantage those advisers who are working hard to treat their customers fairly and prepare for the upcoming changes”.

“This might mean that advisers continue to provide ‘biased’ advice to consumers (when recommending a product provider) and also make some firms’ adviser charges look lower than others simply because of the deals and arrangements they have in place with providers,” it said.

“Money from these arrangements would effectively cross-subsidise the cost of advice and could cause firms to recommend certain providers and products over others.”

The UK FSA added it would take “robust action” where it sees evidence of the rules being circumvented, although it was not seeking a blanket ban on arrangements between providers and advisers.

Today’s letter was sent to a sample of the largest providers of retail investment products to the UK market, as well as the largest distributors, and asked them to confirm that any agreements in place, or being negotiated, are compliant with the prospective adviser charging rules.


This article was first published on Investment Week

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