The FSA says it may need to intervene in the distributor-influenced funds market due to concerns over conflicts of interest and complex charges.
It says one of the key risks with Difs is a conflict of interest between the incentive for adviser firms to recommend Difs and the requirement to ensure advice is in a client’s best interest.
It is also concerned it is often difficult for investors to gauge what part of the service they are being charged for.
The FSA says: “Firms with Difs should understand we have concerns over this market and we expect them to pay particularly close attention to sales processes and the quality of their advice, including their obligations under the client’s best interest.
“We continue to monitor this market and expect standards to improve. If not, we may need to intervene to ensure customers receive the right outcomes.”
Atkinson Bolton Consulting, which has its own Oeic, says it keeps Chinese walls between the fund manager and discretionary investment managers, and charges clients separately from the fund.