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FCA set for independent advice and referrals talks

The FCA has agreed to meet the Institute of Chartered Accountants of England and Wales to discuss growing concerns over the regulator’s guidance on independent advice and referrals, Money Marketing understands.

In a thematic review published in March, the FCA said advisers cannot call themselves independent where they refer cases to specialists, whether internal or external. The only exception is where they are referring cases related to occupational pension transfers and long-term care.

In June, Money Marketing revealed advisers were being told to ignore the guidance as experts warned the FCA had interpreted its own rules incorrectly by applying them to individuals and not firms.

4 Pump Court barrister Peter Hamilton said: “The guidance is frankly wrong. The FCA said it was produced in response to requests for further clarity but unfortunately the FCA seems to have misunderstood its own rule and has caused confusion.”

Trade and professional bodies raised concerns the guidance would prevent advisers from specialising and lead to poorer consumer outcomes.

The ICAEW said it had lobbied the regulator and invited it to a seminar on the subject but with little response.

An FCA spokeswoman says FCA technical specialist Rory Percival has agreed to speak at an ICAEW event in the coming months although the agenda has yet to be confirmed.

The ICAEW declined to comment.

Minutes of the FCA’s June board meeting, published last week, revealed its smaller business practitioner panel had raised “continued concern” about the definition and interpretation of independence regarding referrals.


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There are 7 comments at the moment, we would love to hear your opinion too.

  1. The FCA has really got itself into an appalling mess here. Sooner or later it will have to back down and when it does it will loose face which is why it is keeping up the current sorry charade. Better to get it over with soon before any more unnecessary damage is done to firms trying to comply with stupid, silly and pointless rules.

    Any firm should be able to class itself as independent if it has no direct distribution agreements with product providers and is not owned by a provider. It should be allowable to be a pensions specialist and refer LTC, mortgages, investment etc to other firms without jeopardising your independence. Surely this is how we get better consumer outcomes not worse.

    The FCA is making itself look very foolish by imposing rules at damage firms AND the consumer.

  2. Rt Hon Sir Arthur Streeb-Greebling 24th July 2014 at 11:49 am

    Since the ICAEW allow its members to tie to SJP, I find this somewhat of a paradox.

  3. E L Wisty (an only twin) 24th July 2014 at 12:00 pm

    If I’m reading this correctly, someone at the FCA has misinterpreted a fundamental rule with detrimental consequences for advisers and their clients. No doubt this was an ‘innocent’ error, and was more cock-up than conspiracy.

    However, if this had been the other way round, and an IFA had innocently misinterpreted the FCA rulebook, and had caused detriment to a similar number of clients, there would be hell to pay. If the IFA discovered the error, they would be expected to promptly disclose the breach and conduct a past business review, ensure appropriate staff re-training (and possibly disciplinary action) and fully compensate clients.

    Is it not reasonable to expect the same standards of our regulator?

  4. I couldn’t agree with Soren more and have made similar points on various forums. And surely anything which causes problems for consumers is fundamentally contrary to what the FCA is supposed to exist for?
    If we ever reach (if we haven’t already) a position where following rules or strictures laid down by the FCA is detrimental to our clients I hope we would have enough guts to decline to follow those rules and to hell with the consequences.

  5. I can’t think of any other profesion where it’s a regulatory requirement to be a “Jack of all trades”.

  6. I predict the following at the meeting
    ICAEW “Thanks for agreeing to see us”
    FCA “You’re welcome”
    ICAEW “we cannot make head nor tail of this definition as it is illogical and is unworkable”
    FCA “Thats a shame because in the round the research we did said this was the easiest way to proceed so thats what we did and are sticking to it”
    ICAEW “And that’s it?”
    FCA “Yip…… NEXT?!!!!!!”

  7. Taking the FCA Independance stupidity to the nth degree. If I am really busy, I will not take on a new client and suggest a few local advisers I trust instead for a client to ask, including my locum if it is the sort of business he LIKES. By me declining to advise on business I enjoy or like to do, or simply based on available time to do my research, , that appears to make me restricted according to this MAD definition! MAD, MAD, MAD.

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