FCA warns on ‘whole of market restricted’ advice label

The FCA has questioned firms that are adopting ‘whole of market restricted’ as an advice label, saying it is “best not to go there”.

Speaking at the Personal Finance Society annual conference in Birmingham last week, FCA technical specialist Rory Percival said the regulator defined advice as either independent or restricted.

Responding to a question from Money Marketing on the issue, Percival said: “We do not have a label ‘whole of market restricted’ for consumers. We have independent or restricted. That is not to say you cannot say whole of market in the same sentence as restricted. If you for example specialise in pensions you might say we specialise in pensions and hence our advisers are restricted to retirement planning, but within the pensions field we select from the whole of the market. That would be a clear explanation.

“But introducing a third category, we are restricted whole of market, is a client going to understand what that means? You have not explained the nature of your restriction. So it is probably best not to go there.

“Does the market understand the difference between independent and restricted? Very probably not, but that is probably not surprising given it is a new change. Therefore it becomes incumbent on advisers when they are explaining what service they are providing to make that clearer to the client.”

Writing in Money Marketing last week, Sesame chief executive George Higginson said the network would be whole of market for investments and pensions, while being independent for mortgages and protection.

Percival said areas of the market the regulator was looking at include consumers not shopping around for advice, and the need for advisers to provide clear literature to clients.

He also raised the issue of charging structures that look like models in place pre-RDR.

Percival said: “In this respect we are interested observers in how the market develops and how it might structure its fees going forward. It is an open question for advisers. Perhaps we might see different structures that are more beneficial for clients and firms over time. We are not necessarily taking any action in that respect, what we are saying is we are interested in seeing how the market develops.”