Changes to advice - Financial Conduct Authority

Changes to advice

Last Modified: 19/02/2016
Find out about our recent changes to the way you get financial advice and what they mean for you.

A financial adviser can help you make the most of your money but you need to be confident you are getting advice that is right for you.

To help make sure this happens we recently made improvements to the way you get financial advice, which took effect on 31 December 2012.

These come from our Retail Distribution Review (RDR) and mean you:

1. Know how much advice costs

Advice has never been free. If you received financial advice before the changes you were probably paying commission to your adviser.

Commission was usually a percentage of your investment – typically 1% to 8%, or sometimes more on a lump sum. So for an investment of £10,000, your adviser could have received between £100 and £800 commission.

Instead of you paying commission on new investments your adviser now has to clearly explain how much advice will cost and together you will agree how you will pay for it.

This can be a set fee paid upfront or you may be able to agree with your adviser that they can take their fee from the sum you invest.

This way you know exactly what you are paying and that the advice you receive is not influenced by how much your adviser could earn from the investment.

Find out more about paying for advice.

2. Know what you are paying for

Financial advisers can either advise you on all products that may be right for you or focus on certain areas, such as pensions.

Following the changes, financial advisers that provide ‘independent’ advice now have to consider all types of investment areas. They can also consider products from all firms across the market.

An adviser that has chosen to offer ‘restricted’ advice can only consider certain products, product providers or both.

Your adviser has to clearly explain what they can advise you on.

Find out more about the differences between independent and restricted advice.

3. Get improved professional standards

Some investments can be hard to understand. So we have increased the minimum professional standards of qualification that advisers have to meet, to ensure their knowledge is up to date.

What you should do next

Next time you see your adviser ask how much you have been paying for their advice and how much that same advice now costs.

Your adviser should be able to explain how these changes affect you and your finances, and whether they offer independent or restricted advice.

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