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Martin Bamford: Wheatley may well be right on dealing bias

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Martin Wheatley, speaking after the last FSA public meeting, referred to a “dealing bias” – a term I had not heard. Product bias and provider bias were two of the bedrocks of the RDR and the reason for the abolition of commission; dealing bias appears to be one of the unintended outcomes.

It seems many IFAs have simply replaced commission with adviser charging. Why is anyone, including the regulator, surprised by this? Surely it was obvious that if an IFA was charging 3 per cent plus 0.5 per cent in the commission model, post-RDR they would choose the route of most efficiency for their business, and possibly their client, by continuing with 3 per cent plus 0.5 per cent adviser charging.

It seems Wheatley is concerned that IFAs are only getting paid if their clients buy a product. But if that is the model the intermediary wants to work with, why is it wrong? The bundling of advice and implementation, where the adviser is remunerated only if the client buys a product, has been around for decades. It is valid if it works for the consumer and the intermediary. It may not be the model used by all IFA firms – some of whom unbundle the work, charging predominantly for the advice work and less for the implementation work – but it is still the most common method of pricing.

With all the feedback that the FSA, and now the FCA, had from the authorised and regulated intermediaries, surely this outcome should have been obvious long ago. Is the main concern that the charge is expressed as a percentage of the money to be invested or is it that this charge is payable only if deducted from a product? Nothing is fundamentally wrong with expressing price as a percentage. It is a common approach across many services.

Some of us may prefer the certainty and clarity of a fixed price for services – a project fee rather than hourly rates – but that does not make percentage charging wrong. 

But what if Wheatley is right for the wrong reasons? 

Dealing bias might somehow be worse than product and provider bias – although I recall there was scant evidence of the existence of both of those.

What if he is right because the consumer places the most value on advice and planning and the least value on product solutions that might come as a result of that advice? I am not saying that the product solution has no value; just that it has less value. This may be a little difficult to accept where advice is dominated by a product solution. But if correct, perhaps Wheatley is right and the charge the intermediary makes should be skewed towards advice, payable even if there is no implementation of a product.

As long as dealing bias is properly considered and explained to the consumer, adviser charging expressed as a percentage should do little harm. Where advisers claim to provide advice for free and their remuneration is contingent on a product sale, we have made little progress as a result of the RDR and Wheatley is right to raise these issues. 

We only become a profession when we break the link between product sale and remuneration. 

This latest regulatory pronounce-ment could help with that transition, as brutally painful as it will feel for advisers still wedded to the old product sales mentality.

Martin Bamford  is managing director of Informed Choice 


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There are 49 comments at the moment, we would love to hear your opinion too.

  1. The FCA, the industry, advisers need to ban, stop, cease taking money from the client via – existing investments, new investments, new products …..

    The client should pay by cheque for advice/implementation.

    Until this happens clients will continue to get ripped off.

    My view is over the next 5 years clients will start to question these charges and markert forces (as they always do) will sort this mess out.

    The FSA should have had the b#lls the ban taking fees through products.

  2. Agree. It seems odd that advisers are still taking “commission” i.e. charges from an ISA as well as an adviser charge from a transfer into an ISA thereby not fully utilising their ISA allowance. Why take any charge from an investment when you have already paid for the cost of the investment? Advisers argue about giving the client choice as to how they pay but the truth is we haven’t the guts to argue what is best for the client which is basically leave your investments intact thereby maximising your returns and pay me a cheque and / or retainer.
    The FCA got the RDR wrong when it came to disclosing costs and charges. Keep the contract clean and invoice the client directly.

  3. Incompetent regulators 9th August 2013 at 9:17 am

    A good source from a provider has told me he has some advisers regularly talking with his company for advice on their products, clients have been charged for advice and no business transacted. So here we have advisers ripping clients off for hourly fees and offering them nothing as a result. What about these situations? FCA and RDR has caused this mess.

  4. Im not sure what all the fuss is about.
    IFA quotes a a charge that is payable for the full package, including implementation should the client choose to do something, with agreement built in to pay a lower charge if no implementation takes place should the client decide not to.
    NO “dealing” bias for the IFA, hes paid for all work done whatever happens, plus the client knows what they are agreeing to in advance and has choice to implement or not. They can even choose to self implement if they wish. Maximum consumer choice and IFAs paid for what they do and not paid for what they dont do.
    Is it really any more complicated than that?

  5. I suspect that the first two comments have come from IFA’s that either only deal with HNW professionals or are London based. There are a hell of a lot more IFA’s who do an excellent job, provide the client with options on how to pay, including product charging which for so many existing clients remains the only way in which they can continue to access quality advice. How an IFA decides to run his business as long as he is disclosing his charging structure beforehand to the client and the cost of the advice is his business. On the other side of the coin for clients with regards to dealing bias is that they may feel under pressure to buy a product knowing full well that they may end up with a service with no return. And finally with regards to the client should pay by cheque every time. Great idea especially for higher rate tax payers who want to invest into pensions.

  6. @anon Aviva offered me 1.5% commission on an annuity as long as I ticked the “no advice” box.

    The FCA need to take the next step, ban all charges from products bad these commission issues.

    The taking of % fees on going fees is no better than legal extortion.

    I’ve lost 40% income this year this year on changing to cheque. It’s the only way to offer real value.

  7. @Sam. Absolutely right. I cant see any point in ever taking an initial advice charge from an investment product. Especially re the ISA allowance of course, but also why delay it by sending it to a provider to then send back to you days or weeks later!?

  8. Reductio ad absurdum

    When this one gets bashed down another one will rise up…

  9. To the above.

    I give advice only, no implementation or products. My average fee is 300 quid and most are mass market clients. I take no on going charges.

    I do around 8 appointments a week.

    Do the maths yourself.

  10. @ Richard Bishop
    So how would that work with trusts, where it’s the trustees who must pay for the ongoing advice? Holding cash in a trust has its own issues eg annual tax returns and potential accountant’s fees. As for an existing (pre-RDR) DGT invested solely in a bond: there’s no cash to pay fees and, if withdrawals are made from the bond to pay them, it’s likely to create a chargeable event every year. Is that better for the client than continuing with trail?

  11. We are neither London based or dealing with HNW clients. And we charge clients even where there has been no “business transacted “. A product is not always the result of advice.
    And we do an excellent job, provide the client and offer options on how to pay, including product charging which for some may be the only way in which they can continue to access quality advice. But it is only for some – for most ordinary clients I cannot see how you can justify taking charges from an investment. Clients who invest for the medium to long term should have readily accessible cash to pay for the advice they wish to have on an on-going basis.
    How many advisers express in clear written terms it would be better if the client pay by cheque (or by instalments / retainer) as on-going charges will erode their returns?

  12. IMHO, the FSA is/was right to seek ways in which to separate advice from the sale of a product, but I think it was also right to allow provider-facilitated charging to continue. An overnight ban on the latter would have been too brutal a transition for most intermediaries to cope with.

    That said, wouldn’t a sensible transitional move have been to stipulate that not less than a defined proportion of the total hoped-for remuneration on any package of services must be charged to and paid by the client before the presentation of any product/s?

    After all, it seems to me to a bit misleading to call yourself an adviser if everything you do for your clients is predicated on selling them a product. That’s what the banks do and I’ve long railed against the FSA allowing bank salespeople to call themselves anything other than sales consultants.

    Then again, simple and clear solutions, unfortunately, have never been the FSA’s forte, have they?

  13. Concerned authorised IFA 9th August 2013 at 11:16 am

    To Richard Bishop

    If you are charging only £300 to take out a product no matter what the size of the case then I would love to check some of your files as I can’t see how you can put one together in less than four hours work. That means that your hourly rate is only £75 per hour – out of which you have to pay all of your expenses.

    I’m quite happy with the way I charge my clients for my time and expertise whether that is a percentage of investment or an hourly rate. The FCA has no right to dictate how a business charges for its time and expertise as long as that business is operating within the rules of the profession. RDR was about disclosure not about banning percentages as long as the IFA has a clearly defined fee agreement which is signed in advance of any work undertaken I don’t see the problem. If you want to talk about banning percentages and maybe the FCA should also talk about limiting our liability after all giving investment advice has inherent risk particularly when you’re talking over 20 years.

    I’ve said it before if an estate agent, probate solicitor, and indeed even credit card providers can charge percentages why can’t IFA’s.

    Furthermore, I hope for your sake that none of your clients come back and sue you for the advice you have given them 20 years later when you haven’t provided any on going service.

    From your comment above are you actually authorised and regulated by the FCA as you clearly state above that you don’t implement products.

    If you are not authorised then you should cease giving advice altogether as you are clearly breaking the FSMA 2000 and 2012 act that regulates financial advice. The act clearly states that giving financial advice on a regulated product is authorised activity only.


  14. Gents – Please stop slating each other for the way everyone does business. The long and short of it is very simple. We are all in business to make money for what we do. That money has to come from clients (and/or their products), end of story. What ever form that extraction of money from the client takes, obviously the FA is happy and the client is happy therefroe it suits them best. That should be the end of the debate. What works for one may or may not work for A N Other, so what? That is the way of the world. Deal with it and stop trying to help the FCA dictate how we charge for our services..

  15. Had to go back to the top of the page due to so much negativity and arguing I thought I had somehow managed to open up one of Nicci Cutti’s columns in error

  16. @Concerned authorised IFA

    Yes – I’m FCA DA. The FSA/FCA rules are all product based.

    Anyone can give financial advice my friend.

    No files required.

    Try and understand the business you’re in and how it works.

  17. Sam Caunt says “How many advisers express in clear written terms it would be better if the client pay by cheque (or by instalments / retainer) as on-going charges will erode their returns?”

    This is precisely why most comments on here are laughable !!

    Sam, I suggest you read the above back to yourself and keep on reading until it sinks in. Deduction of adviser fees from the client from any source is an erosion of the client’s capital and the only time it isn’t is when it’s free !!

  18. A: If I have two beans and then I add two more beans, what do I have?

    B: Some beans

    A: Yes… and no. Let’s try again shall we? If I have two beans, then I add two more beans. What does that make?

    B: A very small casserole.

    A: …the RDR was something that just happened to other people wasn’t it?

  19. @ Richard
    “Anyone can give financial advice my friend.”
    Its complex but I think youll find that even advice that DOESNT include a product IS still regulated if you are making the advice personal and for reward. Anything else is an opinion, which isnt regulated, but personally focussed advice for reward, when you know the circumstances of the person IS a regulated activity (see FCA glossary) – no “product” required.

  20. Concerned authorised IFA 9th August 2013 at 1:58 pm

    Richard Bishop

    You are wrong – giving advice on a regulated product and personalise recommendation should only be carried out by an FCA registered authorised person.

    If you have any doubts on that fact may be should reread a money marketing article recently where the FCA took an individual to court and successfully prosecuted that person carrying on giving advice when they were de-authorised.

    If your business plan is giving detailed recommendations on products and then getting the client to implement the product themselves by execution only I think you’ll find that will be breaking the law.

    In fact the FCA are so concerned about this that they have already announced that they are to conduct a review of the execution only business model.

    What you have successfully demonstrated is that part of the profession is operating a execution only business model as an advice service which is clearly contravening FCA rules.

    Now I understand how you can operate a £300 advice charge when in fact it is execution only.

    Fully aware of this practice and hope that the FCA bring out clear guidance and rules as soon as possible.

    You may also want to refer to a court ruling on Nationwide Building Society who operated and execution only service where a client successfully sued Nationwide for advice. The judges comments stated that because the sales staff member held in-depth conversation with the clients advice was inevitably given under thus the judge ruled that the execution only service was in fact an advice service even though the paperwork showed that no advice was given.

  21. Kettle and Pot – you’re WRONG, plenty of financial planners giving advice and not regulated.

    As I say, too many folks are clueless as to the business they’re in.

  22. @Kettle and Pot

    I’m afraid that Richard is correct. Advice that does not involve a specific investment is not regulated by FSMA or the FCA. Thus, generic advice, for example, on asset allocation, is not regulated. Advising someone to invest £24,786 in a UK Equity fund is not regulated advice. Advising on the merits of the M&G UK Equity fund is.

    However, even if the advice is not regulated there will still be legal obligations based on a duty of care (and contract if there is one) if it’s done for reward and possibly even if it isn’t depending on the circumstances. Of course, in this instance, if something does go wrong then the law will decide and not what the FOS think is fair in their current opinion.

  23. Just give the client a choice is my opinion. If the fee is £1000 then that is the net deduction from the client’s wealth. It doesn’t matter where it comes from.

    If I pay my solicitor £1000 and deduct it from my ISA its numerical value is the same as if I pull it from my deposit account.

    There’s an awful lot of fuss about nothing here it seems to me. Agree terms, scope of work and method of payment with your client and then get on with it.

    Nobody down Regulation Street seems to be concerned that I’ll be paying 3% stamp duty when I finally complete on my new house or that the estate agent will charge me 1.5% for selling. Or 20% VAT when I buy a new fridge all of which depend on the sale of a ‘product’. Pah!

  24. I agree with Mr Bamford’s article. I would like to extend the debate a bit further though.

    Re-reading the quotes attributed to Mr Wheatley on this topic, it appears that the crux of his concern over “dealing bias” is that clients may be pressurised into purchasing a financial product as this is the only way that that particular adviser gets paid. If you extend that logic, then presumably the regulator should be just as concerned about advisers that apply similar pressure tactics on someone to take up a fee based service?

    Therefore, is the debate not more about ethics and doing the right thing by your client than it is about fees and advice models?

    As an aside, in relation to the percentage charges debate, if you can call it that, when I was about 8 I learned that any number is a percentage of another number.

  25. Its crazily complex but I beg to differ with Grey and Richard.
    FCA Glossary definition of “regulated activity” includes “advising on investments” which itself includes “advice on particular investments”, without explicitly saying that a specific product is needs to be involved, ie “particular investment” can simply mean a pension as opposed to an ISA. It seems logical that it should be down to whether you are making a personal recommendation (ie what ID view as advice) as opposed to just expressing a general opinion.
    This has all been made way too complex by the regulator, even for the industry let alone the consumer, but I just followed the Glossary terminology and thats where I ended up

  26. @Kettle

    I can see where you’re coming from but it isn’t that simple as you’ve pointed out. If you go back to the legislation it is clarified in the Regulated Activities Ordure [Sic] that defines advice. The advice must involve a particular investment to be regulated advice.

    You can view the law here (Section 53):

  27. Anonymous | 9 Aug 2013 9:17 am

    I hope you are being silly.

    Otherwise that is the whole point of RDR – advice may be given and charged for irrespective of whether business is transacted.

  28. Thanks grey – useful link.
    But reading it still seems to leave exactly the same potential dual meaning as before – because “advice…..on the merits of… buying… a particular investment” could still apply to giving advice to invest in a particular investment (such as an ISA rather than a pension) without specifying or arranging a specific product.
    Do the FCA really think its ok for someone totally unauthorised to take money off a consumer for advising them generically to invest £x into a pension and £y into an ISA in order to eg retire at 50, when they might get the figures horribly wrong? Can that be where weve got to?

  29. @Anonymous 3:25

    OK, well it states advice to a customer is:

    “advice on the merits of his doing any of the following (whether as principal or agent)—

    (i)buying, selling, subscribing for or underwriting a particular investment which is a security or a contractually based investment”

    The key words are ‘particular investment which is a security or contractually based investment’

    Advising someone to invest £50K in a UK Equity fund doesn’t meet this because ‘UK Equity fund’ isn’t, in itself, ‘a security or contractually based investment’, it’s just an asset class.

    Hence the difference between advice and regulated advice.

  30. Grey is spot on.

  31. The perimeter between regulated advice and generic advice was dealt with in by the FSA in the early part of the RDR process.

    I strongly recommend that people confused by Richard Bishop’s model read FS08/06, Annex 7.

    The line between generic and regulated advice is very fine, but I think it is a nightmare for firms to supervise. (Our firm looked at it and backed away for that reason). Therefore I suspect Richard’s business model will remain a niche one restricted to sole traders who understand where the business risk lies and can manage it them selves.

  32. headbelowthe parapet 9th August 2013 at 8:26 pm

    If pre RDR a business needed a 3% + 0.5% model to succeed, how and why would it work on anything less post RDR?

    Maybe being ‘wedded to the product sales mentality’ is a comfort issue – historically the route to becoming an IFA has typically been via home service or bank-assurance and the successful remuneration model in those environments is one of reward for product sales.

    However, this discomfort may come from the client, it may come from the adviser, or it may come from both.

    I suspect it is the latter – perhaps advisers are not fully comfortable with the concept of advice being a ‘product’ in its own right and they only perceive a value when a financial product has been sold to plug a particular gap; and perhaps a client (who through experience expects to buy a financial product) only perceives value once a product has been sold.

    If The Regulator took steps to change the public mind-set towards financial advice they might also change the profession.

    Employing Hollywood actors to bang on about how everyone has been ripped off, allowing the MAS to pretend that they offer free impartial advice, and letting pseudo non-advised commission generating sales to continue, probably won’t help.

  33. RDR affects investment advice only so when would you be providing advice which does not involve a product. Those charging anything other than a % of funds are the simply confusing themselves and the client. Agree the fee with potential client, do the work which ultimately ends up with a product sale,then you get paid either direct or via product provider. This is how business is done, what is the real debate?

  34. Listen you jumped up insurance salesmen, oops sorry, wealth managers. I don’t give a toss whether the fee is paid by cheque or deducted from investment. What I and millions of other potential investors object to is the outrageous level of commission – sorry fee ! You feel you can justify. 3% – 4% up front + .5% – 1% p.a. a total and utter rip-off !
    Be totally honest ( I know it comes difficult ) – would you pay it ?. I was quoted £18,000 – £24,000 to invest a fund of £600,000 – a total joke ! – for heavens sake get your industry cleaned up or die

  35. Same as any other industry? 12th August 2013 at 9:07 am

    I dont disagree with you that fees of THAT level are ridiculous. But just shop around as you would with any other product. You wouldnt buy a new car at the full RRP nowadays, you wouldnt buy a new kitchen costing £50k when you can get virtually the same for £10k (give or take “fluffy” differences!), you wouldnt pay £500 for a Will, you might not pay an Estate Agent 1.5% to sell your house when you can diy for £500 (altho some might CHOOSE to), you wouldnt pay £2k for a package holiday that you could DIY for £1k (altho some might) and you wouldnt pay for private medical when you can get it free on the NHS…altho many CHOOSE to!
    The whole point is, info is out there, so is choice. Do the research until YOU find what YOU are looking for. Why should we as an industry be different to every other – we have expensive options, we have cheap options, we have overpriced and probably some underpriced. Find what you want but dont knock the whole industry.
    PS – write to the regulator if you think its all overpriced; I could probably deliver decent advice for about one FIFTH of what we end up having to charge to do it in line with the regulation. For example, on your £600k, I could probably charge you £500 and give you something decent (“perfection” would of course cost lots more but prob not worth it!!). But the cheap decent advice wouldnt be “compliant”. To do that, it would need to be well over £2.5-3k (if its as simple as you say) and many many hours. But as a business model, I wouldnt even do that because of the risk liability compared to “profit”, so I’d probably put it up to £4-5k to cover the risk and make it worth the balance. Just clarifying.

  36. There is a fundamental flaw to the FCA’s focus on advice which has been touched on here but is worth stating in simple terms.

    The regulations are focussed on products not advice. If you don’t ‘advise’ on a product then the regulations don’t apply.

    Until the FCA rules (and the law) are changed in this respect then the confusion a will reign because where the FCA are trying to go is incompatible with those very rules.

  37. boiling over 12th August 2013 at 10:22 am

    Thanks for links. I’m going to now assume you’re right, as poring over the handbooks is too time consuming! There are clearly many misconceptions about what the rules mean, probably because trying to navigate through them is ridiculously over complex. My initial instincts were to rule out an interpretation that would be so daft, dangerous and non TCF that even the FSA wouldn’t be capable of it. How naive I was!
    But how crazy is this system therefore. A non authorised adviser (who presumably needs NO qualifications?) can legally be paid to give “advice” to a client on exactly what they should do with their money, as long as they leave them to implement the plan themselves. This means they can massively undercut any authorised adviser for this stage of the work, so will presumably have clients (who at that stage probably don’t get the nuances of all this) flocking to them (as Mr Bishop implies). The generic advice is usually the most important bit to get right ……and yet anyone can do it. Such a cunning regulatory plan they must have had Baldrick in on that meeting.
    I’m presuming that under this model, the non-authorised advisers might also have links to authorised firms, to whom the clients then present a list of specific implementation requirements, restricting the authorised adviser firm to doing that. So the authorised firm can avoid comeback etc and can then implement for very low cost. Without this, the client who wishes implementation advice would have to pay the authorised adviser all over again for the generic bit, so it would be pointless.
    I suppose also that even authorised advisers can attract clients by being authorised, and then offer low cost unregulated advice, again with DIY or instruction-only implementation.
    It would seem to me to be the obvious place an “unscrupulous” adviser might choose to practice post RDR, which is NOT intended to imply that those that do are!
    This just seems to be such an awful consumer solution to have ended up with that I don’t see how the regulator didn’t think this through. What have they been doing with all their collective man-hours of thinking time?
    Frankly, the colossal weight of regulatory obligation means this new advice model (cheap and easy service, low cost, no comeback, no PI, no levies, no FCA fees!) might just prove to be the most commercially sensible game in town, as Mr Bishop has suggested!

  38. @Kettle

    Yes, mostly right except the bit where you hand over for implementation to an authorised firm. If they give advice they will need to do the whole lot again for suitability purposes. However, if they just provide execution only, i.e. the client chooses the actual investment, then that’s how it would work.

    Of course, there’s a lovely irony here. By de-coupling adviser payment from the product it has made this all the more attractive. You can’t be paid by the product so don’t sell one – but that can take you out of the regulatory regime if you adjust your business accordingly.

    Unintended consequence number 397…

  39. @grey
    “they will need to do the whole lot again for suitability purposes”
    Therefore introducing unintended consequence number 398! For example, a fairly averagely switched on client has worked out (and is happy to take the risk of being “wrong” generically) that they simply want to invest eg £11k into eg a Uk equity ISA. Yet now youre saying that they cant just pay you a small sum to limit your advice to researching a UK equity ISA fund ??? You “have” to do everything else as well??
    Where is the sensible consumer choice in all that? If I was a consumer in this industry Id be utterly disgruntled at my lack of freedom to choose what I can pay for

  40. When you advise on a client’s investment as an independent adviser you must look at the client’s overall circumstances and other investments including any debts. Anyone transacting just an ISA will have to demonstrate this consideration…
    It is worse. We have been told that if an independent adviser does a full review and makes investment recommendations but decides that the client also requires specialist pension advice which he cannot give and so asks another adviser within the same firm to advise just on the pension, that pension adviser must start from scratch and reconsider everything including investments, pensions and protection even though the referring adviser may already have done this. And it must be documented otherwise you helpful compliance officer will point out that you are failing in your regulatory duties. Is it any wonder advice costs so much?

  41. @Sam Caunt

    If what you say is correct then I think your compliance officer has got it wrong. If the client is under the stewardship of an adviser and that adviser utilises an specialist within the firm for a specific job then the specialist doesn’t have to consider the other bits – that remains the job of the overseeing adviser.

    There was some directly related guidance from the FSA on this pre-RDR when clarifying independent v restricted.

  42. Grey Area. Our Compliance Officer is quite categoric – a very large national network will confirm this and will expect firms to follow this guidance. I and my firm disagree as did several others at the meeting but we were told we were worng. In a sense the officer is correct. You cannot give advice in isolation.

  43. Sam

    That’s the point though isn’t it? The specialist isn’t giving advice in isolation, it’s done within the context of an adviser who is overseeing the whole.

  44. No. If within a firm you delegate an aspect of work to another adviser within the same firm (or indeed another firm for that matter), then responsibility for the entire advice is transferred to the new adviser. Once the specialist work has been done you can transfer the client back so that responsibility for the entire advice returns to the original adviser. There is no such thing as the firm taking responsibility or one adviser taking overall responsibility. This is feedback as I say from a Compliance Director at a very large firm following feedback from the FCA.

  45. I’m sorry Sam but that’s not correct. The suitability requirements in COBS 9.2 are explicit and require the firm, not the adviser, to ensure suitability. It does not say how this has to be done either in the rules or in any guidance. It can be done by one or many advisers but there is only one suitability requirement.

    This was also covered in FSA finalised guidance FG12/15 in independent v restricted. Section 6.7. You can view that here

  46. Back to basics surely? 13th August 2013 at 12:38 pm

    This article and the comments make a few things abundantly clear:
    The “rules” are too complex – even for industry professionals let alone consumers – to easily understand.
    The consumer (for whom all this supposedly exists in the first place!) has no freedom to choose to pay for what he wants or doesnt want – it seems to be all or nothing with no inbetween in terms of authorised advice.
    The unscrupulous and/or unqualified can legally continue to take payments from consumers for bad “financial advice” just as before, with no regulatory comeback at all.
    The authorised adviser cannot deliver regulated advice at a low enough price to the smaller (£10 – £20k?) client to make it sensible or affordable, almost entirely because of the regulatory burden, if you include every way it manifests itself.
    Business models may be springing up that blur the distinction between regulated and unregulated advice and that may even involve connivance between both types of firms working together.

    The “new”regulator could and should have adopted a clean slate approach to “financial advice” in all its forms. But rather than carry on with something as hopelessly confusing and ineffective as where we are now, it would still be better for consumers (despite yet more disruption!) to start again and create a truly joined up approach, reduce costs, improve effectiveness and clarity, widen consumer choice and SIMPLIFY SIMPLIFY SIMPLIFY

  47. Confusion reigns 13th August 2013 at 12:43 pm

    Sam and Greys exchange seems to prove that not only is it consumers and advisers who find this all confusing – so apparently do some of the compliance professionals!!
    Crumbs, maybe next we’ll find out the regulators dont know what theyre doing either….

  48. Sorry Grey Area – this is not a discussion about independent v restricted. It is about responsibility for the advice. That is the point I am making.
    Incidentally, if you are implementing someone else’s recommendation, you take full responsibility. Not the firm. I am sorry but I would have to accept the view of a senior compliance officer at the largest network in the UK. If you are a member accept their rules not your interpretation.
    I agree it is farcical.
    Still cannot understand why you seperate advice and implementation……

  49. Back to basics surely, very sensible point.
    The rules are now so complicated and costly even industry experienced professional advisers can’t agree.
    Until is it is cost effective to advise on a regular S&s £50 PCM ISA regulation is not working in favour of consumers

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