Advisers have condemned new guidance from the FCA on how referrals interact with independent advice as “pointless” and offering “no consumer benefit”.
In a thematic review published last week, the regulator said advisers cannot call themselves independent where they refer to specialists, whether internal or external. The only exception is where advisers are referring cases related to occupational pension transfers and long-term care.
The FCA says: “Every adviser within a firm must be willing and able to advise on all retail investment products.
“However, it is possible for an adviser to seek expertise from another (either internal or external) as long as they are in a position to provide the final advice to the client.”
FCA technical specialist Rory Percival gave the example of a firm which always refers drawdown cases to a certain adviser as being in breach of the rules.
Until last week, referrals other than for pension transfers and long-term care had not been explicitly mentioned as affecting a firm’s independence.
Apfa director general Chris Hannant says: “A specialist within a firm can deliver better advice more efficiently and cheaply than an adviser who is not an expert in that area.
“This clarification from the FCA is pointless and of no consumer benefit.”
Informed Choice managing director Martin Bamford says each adviser in his firm can advise on all areas but in practice chooses to specialise.
He says: “We make commercial decisions about whether to engage with new clients ourselves once we have determined the type of advice they are likely to require, or whether another planner within the firm would be better positioned to give advice.
“This clarification from the FCA seems to focus on defining independence through products rather than advice, which is a real shame.”