PS14/1: Distribution of retail investments: referrals to discretionary investment managers and adviser complaints reporting

Published: 31/01/2014     Last Modified: 31/01/2014

In this policy statement (PS) we are publishing final rules on the first two of the proposals we consulted on in CP13/4 in July 2013.

We have not published final rules on the third proposal, as these changes need to coincide with an update to text in Gabriel, which is scheduled for June 2014.

Why are we issuing this Policy Statement (PS)?

The rules are part of the Retail Distribution Review (RDR) and contribute to our objectives of consumer protection, financial system integrity and effective competition in the interests of consumers.

The final rules:

  • Ban new referral payments by a discretionary investment manager (DIM) to an adviser when the adviser recommends that a client places additional money with the same DIM from whom they receive payments following a pre-RDR referral.
  • Ban referral payments where an adviser firm does not provide personal recommendations to particular clients, but provides other services to them.

The third proposal – scheduled for June – is a minor amendment to the rules requiring complaints against individual advisers to be reported to us.  This is to match the policy intention that complaints concerning activities when acting as a retail investment adviser – such as advice on shares and derivatives as well as retail investment products – should also be included.

Policy statement PS14/1

Who is this PS aimed at?

You should read this Policy Statement if you are:

  • an adviser
  • discretionary investment manager, or
  • provider active in the retail investment market

Consumers and consumer groups may be interested in the rules on referral payments, as they will affect how firms interact with retail clients.

What are the next steps?

The rules banning new referral payments come into force on 31 December 2014. We currently intend the amendment on complaints reporting to come into force in June 2014.

Want to find out more?

For more information:

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