A Fresh Financial Start In 2013
As of the end of December 2012 the regulatory framework governing financial advice has changed.
The financial watchdog, the Financial Services Authority, has brought in reform which will see minimum qualifications for advisers and a ban on commission on new pension, mutual fund and other investment recommendations.
Under this new legislation, known as the Retail Distribution Review, if a firm is not "RDR compliant" it will not be able to trade and promote itself as an independent adviser. It is a monumental overhaul of the financial services industry and could have as big an impact as the Legal Services Act has had on the legal profession.
“Clients of Pearson Hinchliffe can rest assured we have been providing a RDR compliant services for several years, so for us, it means the FSA industry is finally bringing other IFAs to standards we have already set for ourselves,” said Richard Eastwood, Partner, Pearson Hinchliffe Financial Services/Wealth Management.
“Indeed we welcome the unbundling of charging structures, enhanced consumer choice and a general improvement in professional standards which these reforms will bring,” he added.
From January charges for advice, whether at an hourly rate, retainer basis or ‘facilitated’ through a product, i.e. if clients invest in a fund, pension or portfolio then the fund manager, pension firm, insurers, or wrap platform pay the advisers fee – will be implemented, all with the clients prior agreement.
Under the new legislation the charge to the investor should reflect the service provided to them, meaning it will still be up to the adviser whether they charge a flat fee, hourly fee or percentage. However, the charging structure must be shown to the client in good time before the service is provided and any costs should be clearly disclosed and explained, so that clients understand the charges and they must agree to them before a service is provided.
“A first class ongoing service is paramount for our business as we believe that a firm that prides itself on customers services has very little to fear from its competitors,” said Richard.Subscribe to our newsletter
Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.
This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.