The FCA is concerned about the way some advisers have implemented the RDR, including explanations of adviser charging and restricted firms holding themselves out as independent.
Between February and April the regulator carried out research with 50 firms to examine their approach to the RDR.
It says many have made progress but there were areas of concern. The FCA found some failed to explain their charges in cash terms or gave the initial advice costs in cash terms but not the ongoing charge.
Firms using hourly rates failed to provide enough information for clients to understand the likely cost of advice, which the FCA says could prompt clients into thinking they are “writing a blank cheque”.
Some firms described themselves as independent when they were restricted, and some failed to explain the nature of their restriction.
Some did not provide enough information about whether ongoing service was automatic or must be requested and failed to disclose clients’ right to cancel ongoing service and charges.
FCA director of supervision Clive Adamson says: “While firms have acted, they still have more to do if a customer is going to be in the best possible position to understand the price they will pay and the service they will get for that price.”
Yellowtail Financial Planning managing director Dennis Hall says: “We should not fall into the trap of only talking about percentages when explaining advice charges. As for confusion about independent and restricted, the FCA should admit definitions are not helping consumers.”
The regulator will assess a wider sample of advisers on RDR implementation from October.