RDR: No mandatory oral disclosure script for restricted advisers
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Restricted advisers will not be forced to use a mandatory script in their oral disclosure of their services to clients.
According to today’s RDR policy statement, the FSA agrees with arguments from some in the industry that the proposed wording would not work for all business models.
It says: “We are no longer proposing to mandate the wording firms will need to disclose to their clients which describes the nature of their restricted advice. However, it will still be necessary for a firm to disclose orally that it provides restricted advice and the nature of that restriction.
“We recognise this creates a risk that a firm may look to circumnavigate the rules by using a misleading set of words. However, this would have been a risk regardless of whether we mandated the exact wording, and we will expect, for example, to monitor a firm’s training material to see what their advisers are required to tell their clients.
“We also recognise that 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.”
The FSA says it is retaining the “restricted advice” label, after consumer research found it is the most widely understood description of the service.
But restricted advisers will not have to tell consumers that independent advice is available to them.
The FSA says: “We do not feel it is necessary at present to specifically inform a client receiving restricted advice that independent advice is also available – it is likely to be clear from the disclosure that is given to the client.”
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Readers' comments (3)
Julian Stevens | 26 Mar 2010 1:30 pm
Given that they're already 90% of the way there, this sounds to me like the ideal selling environment for the banks going orward.
A cynic like me might well be tempted to describe this as a very convenient (for the banks) return to polarisation via the back door.
It seems that whilst on the one hand the FSA is beefing up its proposition (and, of course, overheads) as a regulator of IFA's, as far as the banks are concerned, it's becoming merely a facilitator.
Pfaw! What's that smell?
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John Wilson | 26 Mar 2010 1:58 pm
The banks win again
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Anonymous | 26 Mar 2010 2:54 pm
The sooner the FSA is abolished the better then maybe we will get a regulator that understands Financial Services and does not keep penalising IFA's. At present it gives banks a free hand to screw the average man in the street without recourse
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