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Compliance firms are ‘scaring advisers’ on independence rules

Advisers are being “scared” into gold-plating the FCA’s independence requirements by misleading information from some compliance firms, regulatory experts have warned.

Last week, FCA technical specialist Rory Percival told Money Marketing that small advice firms have created unnecessary problems for themselves by “gold-plating” the regulator’s independence requirements.

The regulator published its latest post-RDR review into independent advice last week. Following the review, Percival said many firms believe the independence rules to be more onerous than they are, which he suggested may be driven by compliance firms.

Phil Billingham Partnership director Phil Billingham says: “There is an awful lot of noise about how difficult it is for advisers to be independent and advisers are basing decisions on these myths rather than on what the FCA says.

“I have seen newsletters from compliance firms saying that unless you sell venture capital trusts, you cannot call yourself independent. Some compliance firms are scaring people into signing up to their workshops.”

A promotional email from a compliance firm sent to advisers last week and seen by Money Marketing says: “You can’t be independent if you don’t advise on VCTs.”

Compliance consultant Adam Samuel says: “The FCA’s rules have been misinterpreted by many compliance consultants who say that if you are not recommending every product then you are not independent.”

Last week, Percival said that independence is a “state of mind” and independent advisers need to keep an open mind about suitable solutions for each client.

The FCA says independent firms need to carry out due diligence on only the products they have selected as suitable for their client.

Page Russell director Tim Page says: “There are still plenty of parties with vested interests who want to scare advisers into going restricted.”


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