HSBC is to convert its whole of market IFA arm to a restricted advice service post-RDR.
The bank says while its product offering is not changing, HSBC’s whole of market arm will not meet the regulatory requirements of independence after 31 December.
The FSA has defined independent advice as a personal recommendation of a retail investment product which is “based on a comprehensive and fair analysis of the relevant market” and is “unbiased and unrestricted”.
An HSBC spokesman says: “Under the RDR, our IFAs will move to a restricted model. It is more that the industry is moving rather than us. The terminology under which our advisers need to be defined is changing. From 1 January advisers need to be able to do more to be able to call themselves independent. The range of funds is not changing.”
HSBC works with between 15 and 20 fund groups, offering customers a list of around 40 funds.
In April, HSBC axed its tied advice service resulting in up to 650 adviser job losses, with around 50 tied advisers moving across to the whole of market team of 320 advisers. The bank continues to offer execution-only services.
In September, Money Marketing revealed HSBC is preparing to launch a direct-to-consumer platform powered by technology provider FNZ. It is also looking to FNZ to power a platform for its in-house advisers.
Philip J Milton & Company managing director Philip Milton says: “The mentality among bank advisers is geared around getting paid for the products they sell, so I do not know how advisers at HSBC and the like will operate in the brave new world.”