The FSA says it will be on the lookout for advice biases that will remain or be created following the retail distribution review.
The regulator’s retail conduct risk outlook, published this week, raises concerns about continued provider influence, sales biases and services recommended purely to justify ongoing fees.
It is worried some providers may look to circumvent the commission ban by offering advisers other incentives, such as business or consultancy services, despite inducement rules put in place to prevent this happening.
It points out that a potential sales bias could persist despite the new adviser charging rules.
The FSA adds that the requirement for advisers to provide an ongoing service to justify ongoing fees may incentivise firms to make more transactions than necessary.
Pilot Financial Planning director Ian Thomas says: “There is still a sales model used by some that will continue to see payments by product providers in one way or another. It is one of the problems which I do not think is solved by the RDR.”
Royal London group head of communications Alasdair Buchanan says: “I think the regulator will be eager to make an example of some firms.”
Zurich intermediary sales director Richard Howells says: “The difficulty for the regulator is that there are providers offering training and support to advisers which are there to improve the level of professionalism in the industry.
“Distinguishing between that and other forms of inducement other than commission could be hard.”