The FSA has told consumers receiving advice post RDR will not cost them any more, and argued those with a small amount to invest will not be prevented from accessing financial advice.
A page within the consumer section of the FSA website, updated last week, provides information about how financial advice will change under the RDR.
Titled ‘changes to the way you receive advice about investments’ the web page talks consumers through the concept of adviser charging, where cost of advice is agreed upfront, as well as the increase in professional standards.
In response to a sub-heading ‘does this mean receiving advice will cost me more’ the FSA argues that investment advice has never been free.
The FSA web page says: “The price you currently pay for advice is often hidden within the charges of the product that you buy, and that price is currently set by the product provider, not you – the customer.
“These changes are not altering how much the advice should cost, but rather enabling you to agree how much the adviser gets paid rather than that decision being taken for you by a product provider.”
It adds: “The new charging system will not stop investors with modest means being able to afford financial advice. If you prefer, you will still be able to get advice without having to write a cheque.
“For example, you could instead agree with the adviser to have their fee taken from your investments; the difference in future is that you will agree with your adviser, in advance, how much you will pay for their advice.”
The FSA concludes by saying that consumers should be asking their adviser how much they are charging for advice, and states again that advice is not currently free.