Scrapped script angers advisers

1 April 2010 8:00 am | By Helen Pow

The FSA has been criticised for watering down its requirements for the disclosure of restricted advice, with advisers saying it will play into the hands of the banks and confuse customers.

Last week’s RDR policy statement revealed restricted advisers will not have to use a mandatory script in the oral disclosure of their services to clients despite fears this would lead to some advisers looking to get around the new rules by using misleading words.

The FSA says: “This is a difficult area to monitor and we will look to conduct some mystery-shopping exercises to monitor the extent to which the rules are being complied with.”

St James’s Place and some banks had lobbied to scrap the previous plan forcing restricted advisers to give a mandated oral disclosure of their services.

Honister Capital strategy and business development director Alan Easter says: “If advisers do not have to verbally disclose these details, it will just get lost in the small print.

“Are clients going to know when they sit in front of an adviser whether they are independent or restricted? If they are independent, the answer is likely to be yes but what adviser will sit in front of a client and say, just to let you know, I am restricted and cannot give you whole of market access, if they are not forced to?

“This plays into the hands of the banks. I do not care whether someone is an IFA or restricted but what concerns me is that it will confuse consumers.”

CBK Colchester principal Peter Chadborn says: “Multi-tied was well intended but if you asked consumers after implementation, the vast majority would not have understood the difference. This will be exactly the same. Unless it is explained verbally and in writing, it will just get lost in translation.”

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