The FCA has set an uncompromising compliance standard for what it sees as unacceptable payments from product providers to advisors in the retail investments sector; and laid down a marker for similar payments in the mortgages, protection and other ICOBS sectors. Firms affected must review their distribution/services agreements and other payment arrangements by 16 April 2014.
Following its first thematic review on implementation of the RDR in 2013, the FCA consulted on new guidance to address its concerns about payments potentially undermining the RDR objectives (“Guidance Consultation 13/5 – Supervising retail investment advice: inducements and conflicts of interest” (GC 13/5)”) in September last year. It has now published its Finalised Guidance. In light of feedback received, the FCA made some changes to give “greater clarity to our expectations of providers and advisory firms when entering into service or distribution agreements”. The result is a high overall threshold for firms making or receiving many common categories of permissible ‘inducements’; and a challenge to firms to check that their arrangements comply.
Please click here for our briefing and contact us if you would like to discuss what the Finalised Guidance means for your firm.