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FSA sounds independence warning over distributor influenced funds

The FSA has warned advisers it will be difficult for them to remain independent post-RDR and advise on distributor influenced funds.

Speaking at the Tax Incentivised Savings Association Dif seminar today in London, FSA head of investment policy Peter Smith said advisers would find it difficult, but not impossible, to continue to advise on Difs and maintain an independent status.

He said: “We expect it to be difficult for firms to prove advice on distributor funds is unbiased or independent. There are clearly conflicts of interest and any conflicts of interest need to be managed in a way where the firm ensure they are providing unbiased and unrestricted advice.”

He added: “We are aware some firms recommend their Difs to the majority of consumers and we are concerned this undermines their position as independent today, never mind in the future.”

Smith went on to say the regulator would also be watching restricted firms to ensure any advice on funds they were giving was suitable for their clients and needed to “show that this is the case for each and every customer”.


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There are 13 comments at the moment, we would love to hear your opinion too.

  1. Does the Verbatim offering from Simply Biz and the Sinfonia offering from Tenet classed as DIFs.

  2. Typical FSA jargon. What is a distributor influenced fund?

    I also echo the question of the previous chap. Why does he/she need to be anonymous, by the way for suh a question?

  3. I can confirm that the IM Verbatim Funds are not ‘distributor influenced’. Full details available on request to

    Best wishes,

    Neil Stevens

  4. For DIFs read Broker Funds

  5. For once I think the FSA are probably correct.
    Offering your own in-house managed fund may have been done for the best of motives but that doesn’t necessarily make it right for all clients.
    If the motives were not the purest (would YOU trust your bank’s in-house range?) it is easy to see customers being disadvantaged.
    Most of us have met people who were unsure whether they were dealing with an IFA or a tied fund manager.
    If all the FSA intend it to ensure there is absolute clarity that can’t be a bad thing for customers.

  6. To Frank Iredale – I always choose to be anonymous that way you recieve no flak.

  7. About time the regulator looked at this. All those old broker funds will be now on notice that they are looking

  8. Shows the lack of knowledge that many on here don’t know waht a dif is…..

  9. Quite why the FSA permits Towry Law to advertise itself as being “fee based wealth advisers providing Independent Financial Advice and Independent Investment Management to private clients” remains one of the industry’s enduring mysteries. TL’s recommendation for investment of a lump sum is pretty well a foregone conclusion from the word go.

  10. dirty grubby broker funds 28th September 2011 at 10:38 am

    lets support the FSA to drum this stuff out of the industry. a very simple thing they could do would be to classify advisers with broker funds as complex businesses and require complex businesses to have a lot more capital. it would also serve to protect the end consumer. this would give those peddling broker funds to put their money where their mouths are

  11. Well said, Julian Stevens

    I have been on a Towry training course and every client gets shoe-horned into one of their 4 or 5 portfolios.

  12. Desmond Luke Centaur 6th October 2011 at 11:34 am


  13. TEST TEST TEST TEST TEST*******************************TEST TEST TEST**************** TES TEST TEST TEST TEST***********************************

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