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Regulator warns dual firms to beware of misleading clients

The FSA has told firms planning to provide both independent and restricted advice they will need to be careful not to mislead clients about the advice they are receiving.

The regulator published its final guidance this week on independent and restricted advice under the RDR.

It states that if a firm includes “independent” in its trading name, it is likely to be holding itself out as providing independent advice to all clients that approach the firm. Therefore, all personal recommendations need to be independent.

If a firm provides both independent and restricted advice, firms may offer clients a choice between independent or restricted advice or may have two or more trading names to separate its independent advice and restricted advice arms.

The regulator makes clear if a firm offers both independent and restricted advice, it should not hold itself out as independent to any client not receiving independent advice.

The FSA says: “We expect a firm to consider where and how it uses the term independent advice to ensure it is consistent with its obligation to be fair, clear and not misleading in its communications with clients. Essentially, the consumer should be left in no doubt of the type of advice they are receiving.”

Aifa policy director Chris Hannant says: “The guidance serves as a timely reminder to advisers who have not decided on their post-RDR business plan to do so now.”

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