The Financial Services Authority (FSA) has
written to the CEOs of 24 product provider and advisory firms
warning them not to use distribution agreements and cross-subsidies
to ‘work around’ the Retail Distribution Review (RDR) commission
ban.
The regulator said it is worried that firms
may try to bypass the adviser charging rules by soliciting or
providing payments or benefits.
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The FSA also said that it would take “robust
action” if there is sufficient evidence of the rules being
circumvented, although it was not seeking a total ban on
arrangements made between providers and advisers.
‘Biased’ advice given out
The FSA said the supervisory work it had been
carrying out had alerted it to moves in the market that “could
undermine the RDR adviser charging provisions and also unfairly
disadvantage those advisers who are working hard to treat their
customers fairly and prepare for the upcoming changes”.
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By GlobalData“This might mean that advisers continue to
provide ‘biased’ advice to consumers, when recommending a product
provider, and also make some firms’ adviser charges look lower than
others simply because of the deals and arrangements they have in
place with providers,” the FSA added.
“Money from these arrangements would
effectively cross-subsidise the cost of advice and could cause
firms to recommend certain providers and products over others,” it
added.
