FCA: There’s no ‘magic number’ on suitable advice charges

The FCA says there is no “magic number” to decide whether advice charges are suitable as it urges advisers to look at whether clarity and quality of service is borne out in fees.

At a press conference in London today on the FCA’s business plan, Money Marketing asked FCA executive director of strategy and competition Christopher Woolard how advisers can judge whether or not their charges are suitable.

He said: “There’s no magic number,” and added “clarity and quality of service in relation to what clients are being charged” was what advisers should focus on.

Woolard said fair charges should make clear to the consumer whether they are being placed in a tracker or higher cost products in light of the findings of the FCA’s recent asset management study.

He said: “Are you clear clients are being invested through a passive type product or a more active way? Can you be clear on those things?”

Woolard added the FCA’s Advice Unit, which was set up from the Financial Advice Market Review to foster automated advice, would help firms offer lower cost services.

He said: “We are trying to see the development of a number of different price points where people get a number of different services to suit their needs.”

The FCA set out in its sector view on retail investments this morning that some advisers did not consider the total costs on the clients at each stage in the planning chain.

Woolard said: “Is value being thought about in the round rather than being thought about in discreet chunks?

“There’s a large amount that’s being paid for the vehicle to get to the asset…as opposed to the asset itself.”