The FSA has made clear that any investment by a product provider in an adviser firm must be on commercial terms which are objectively comparable with the terms on which an independent unconnected person would be willing to make an investment or provide a loan. Providers may only give money or assistance to firms for the development of software if this generates equivalent cost savings for the provider or consumers.
The FSA reiterates that inducement payments from providers to secure intermediary distribution are not allowed and infringements of the regulations will not be treated lightly.
Training facilities can only be given to a firm if they are made generally available to other firms which give or might give advice on the provider’s products.
Independent firms must disclose any credit made to them by a provider while firms which are part of a group must disclose every circumstance where the amount of credit they have received from the provider exceeds 10 per cent of their share and loan capital.
The FSA allows IFA firms to advise employees on their employer’s group personal pension without compromising their right to describe themselves as independent and this exemption has been extended to employer stakeholder pension schemes as they are sold in a similar way.
Informed Choice managing director Nick Bamford says: “The removal of better than best does make it easier for providers to invest in distributors and we are seeing signs of action in this area. Some of the barriers that existed have gone.”