The FCA says it does not intend to be prescriptive about fee models but has raised concerns about post-RDR charging structures which closely resemble previous levels of commission paid to firms.
Speaking to Money Marketing today following his appointment as FCA director of long-term savings and pensions, Nick Poyntz-Wright says the regulator will continue to monitor how the market is developing following RDR implementation.
He says contingent charging, where the advice charge is only payable when a product is sold, is an issue the FCA was “observing”.
He said while it would be wrong to be prescriptive about how advice firms set their charges, the regulator will continue to highlight charging structures which it sees as problematic.
Poyntz-Wright says: “From the evidence we saw, which was only a sample, many firms seemed to be continuing to adopt the same kind of charge levels they would have been experiencing before the RDR, but are now expressing these as adviser charges rather than as commission.
“We would expect that over time more and more firms would revisit that and think about whether that is the most appropriate approach, and how it suits the different customer segments they deal with.
“If firms are waiting for us to be clearer on this or give more direction, I would encourage them to be thinking about what is most appropriate for them and their customers.”
The FCA announced earlier today it had appointed four new directors as part of a restructure of the regulator’s supervision team.
Poyntz-Wright was appointed to head up the long-term savings and pensions division, which will cover insurers, advisers, platforms and wealth managers. He has been acting long-term savings and pension director since April.
Former HBOS principal risk adviser Karina McTeague has been appointed as director of retail banking supervision, Linda Woodall has been appointed as director of mortgages and consumer lending, and William Amos becomes director of wholesale banking and investment management.
Last month the FCA published its early findings on how firms are implementing the RDR, which flagged concerns around how charges are being explained to clients, disclosure of firms’ independent or restricted status, and explanations of ongoing service.