TR14/5: Supervising retail investment firms: delivering independent advice

Published: 20/03/2014     Last Modified: 01/12/2014

In July 2013, we published our first set of findings looking at how firms and advisers were implementing the Retail Distribution Review (RDR). We have recently completed the second cycle of this work.  

This cycle focused on two distinct areas:

  • whether firms who describe their services as independent are offering a truly independent service in practice; and
  • how firms are disclosing their service proposition and charging structure to clients.

We will publish our findings on disclosure in April 2014.   

What were our findings?

A significant number of firms understood the requirements for delivering independent advice and appeared to be delivering it in practice.  

In response to calls from the industry, for further clarification on the standards required for advice to be independent, we have published examples of good and poor practice. 

Thematic Review 14/5

In addition we have also produced a video on meeting the independence requirements. We hope that these publications will help firms and advisers.  

Referrals to another adviser

Please note: In our discussions with industry some have suggested that the use of specialist advisers within a firm could improve client outcomes and is possible within our rules. Having looked at these points, we agree that this wider interpretation is possible within our rules. Therefore we have updated our website and the recent thematic review to make this clear.

Firms wishing to know more should refer to guidance the Financial Services Authority issued in 2012.

Video

We expect firms who describe their services as independent to conduct a comprehensive and fair analysis of the relevant market, which is unrestricted and unbiased.  We do not have a preference on whether a firm or adviser is restricted or independent, as long as it is clear to the client from the outset what service they will receive.

What are the next steps?

In April 2014 we will be publishing the findings of our review on disclosure.  We looked at how firms were disclosing their service proposition and charging structure to clients.

Cycle three of our thematic review will start in the third quarter of 2014.

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