Advisers referring clients to a firm for portfolio management can take a cut of the management fee without disclosing the earnings to clients under adviser-charging, says Apcims.
In its response to the the FSA’s retail distribution review plans, the Association of Private Client Managers and Stockbrokers says that the adviser-charging proposals do not apply to non-retail investment product business.
It says where an IFA introduces a client to an Apcims’ firm for portfolio management purposes and receives a share of the management fee or an ongoing fee equivalent to a percentage of portfolio value, it does not have to be disclosed to the client.
Apcims says: “In this scenario, because the introduction or fee-sharing arrangement relates to an investment service which falls outside the RIP definition, the Apcims’ firm would not be acting in the capacity of a product provider and would not be bound by the draft Cobs disclosure obligations.
“An IFA would not be obliged to agree its charging structure with the underlying client up front and to disclose details of income received.”
An FSA spokesman says the regulator “understands the point” and will review and consider it along with all other responses to the consultation paper.
Apcims says the requirement for stockbrokers, as well as advisers, to pass a QCF level four qualification will force them to learn about areas such as pensions and life cover that are “totally irrelevant to their role”.
It adds that the FSA’s proposal to extend the definition of independent to include all retail investment products will disadvantage stockbrokers.
Stockbroking firms that do not have financial planning capability will, under the current plans, will have to market themselves as restricted firms.
Apcims chief executive David Bennett says: “Independence should be about firms providing advice which is driven solely by consideration of their clients’ best interests and which is not influenced or controlled by the business needs of product providers.”