The FCA has made clear that it will not be assessing whether advice charges deliver value for money for consumers as part of its post-RDR supervision.
Speaking at the Institute of Financial Planning annual conference in Newport today, FCA technical specialist Rory Percival discussed the findings from the regulator’s recent RDR thematic review in July.
He stressed the FCA wants to see charges disclosed in cash terms, or where charging is not in cash terms, then cash term equivalents should be provided.
On the issue of how the regulator will supervise advice charges, Percival said: “One of the things that gets asked is ‘how can the FCA judge if I’m value for money?’ We don’t do that. You simply have to be clear with the client about what they’re getting so that they can decide.
“If a client is going to take on your service then they need to know what exactly is involved in an annual review, not just have a statement that one will occur.”
Percival also announced the FCA has begun the second cycle of its RDR thematic review, with 120 receiving questionnaires from the regulator.
The FCA began its thematic review in February, focusing on adviser charging and scope of service. It published its findings in July, raising concerns around the way some firms were explaining charges and ongoing service to clients, and that some restricted firms were describing themselves as independent.
The regulator has previously said that while the first cycle was about providing a “supportive approach to the industry”, the second and third cycles will be focused on compliance.