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Examples show ways of meeting definition

The FSA has set out examples of where advisers would and would not meet the definition of independence when using platforms.

It says it can be harder to meet independence rules when using platforms as the product range of investment bonds, personal pensions and Sipps can be more limited.

The regulator says a firm that segments clients to provide a premier service to wealthier clients and which carries out due diligence on its chosen platform would still be independent where the platform has proved to be suitable for most clients, and where the firm recommended products off-platform where suitable.

A firm can use one platform for the majority of cli-ents, provided it is aware of other products across the market. If a firm uses a single platform routinely for all clients, the FSA says this risks unsuitable advice.

Firms can use multiple platforms for client segments with different needs, as long as there is a process in place to ensure each client is considered individually.

Where a firm has individual advisers using different platforms, with a lack of consistency in approach, the FSA deems this to be bad practice.
The FSA says: “The outcome we are seeking is not about ensuring an artificial spread of investments to meet the independence rule, it is about being mindful of the range of product and investment options across the whole market in order that firms can provide suitable advice to their clients.”


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