Independent and restricted advice

Financial advice can be either independent or restricted. All firms providing advice should disclose upfront what type of advice each customer will receive.

Providing independent advice

In order to call yourself an independent financial adviser, you need to provide unbiased and unrestricted advice based on a comprehensive and fair analysis of the market.

Genuinely independent advice is free from any restrictions that could affect advisers’ ability to recommend what is best for the customer.

You need to be able consider all retail investment products, in line with guidance we have provided on independent and restricted advice in our Finalised Guidance.

The definition 'retail investment products' covers:

  • life policies
  • units
  • stakeholder pension schemes
  • personal pension schemes
  • an interest in an investment trust savings scheme
  • a security in an investment trust
  • any other designated investment that offers exposure to underlying financial assets, in a packaged form which modifies that exposure when compared with a direct holding in a financial asset, or a structured capital-at-risk product

This definition applies whether or not any of the above are held within an ISA or a child trust fund.

How do I demonstrate to you that I am giving independent advice?

We would expect an independent firm to be able to advise on the full range of products that may be suitable for their client. Firms that define themselves as independent will need to demonstrate how they have reviewed the market and selected products in line with the client’s attitude to risk and suitability. We do not expect a firm to review the market for a product which does not meet the client’s needs and objectives. Firms can use panels to help review the market.

Providing restricted advice

If your firm only gives advice on certain types of product, or on products from one or a limited number of providers, you must describe your advice as ‘restricted’.

You must tell customers that you provide restricted advice and how it is restricted – by product or by provider. You must do this in writing and also verbally before you give the customer any advice.