Law firms have challenged the Financial Conduct Authority’s claims that disclaimers by execution-only firms may be insufficient to escape suitability rules.
Last month, FCA technical specialist Rory Percival said execution-only services could be subject to advice rules where customers believe they have received advice, and that a disclaimer stating “this is not advice” is not sufficient.
Percival said: “The customer’s perception is a very key determinant of whether it is advice or not.”
But Pinsent Masons partner Bruno Geiringer says: “Badly drafted disclaimers hidden in the small print which firms can then hide behind are clearly wrong. But genuine statements, properly brought to investors’ attention at the right time and written in plain language would be acceptable from a legal point of view. Somewhere along the line these issues are going to come up.”
Reynolds Porter Chamberlain partner Robert Morris says: “Often the line where a service moves from being non-advised to advised is a very fine one. Used properly, disclaimers can be helpful as long as they reflect the reality of the service being provided.
“It is going to be interesting to see what happens with the liability for execution-only services. At the moment this is an area of some uncertainty.”
Pilot Financial Planning director Ian Thomas says: “The question is whether the FCA can uphold its position in a court of law.”
The FCA has backed Percival’s stance on execution-only, saying it does not want to see customers left without recourse if something goes wrong in future.