RDR: 'Convenient' payment red tape could limit adviser options

Product providers will face additional regulatory requirements if they offer convenient advice payment facilities to consumers, the FSA suggests today.

Advisers are likely to worry this increased regulatory burden may tempt providers away from offering these services, restricting, in the eyes of some, the "affordability" of advice.

In its latest RDR Consultation Paper, the regulator says providers have the option to offer such services, but would face increased regulatory requirements.

As advisers will no longer be able to receive commission or factored payments, some providers have looked to provide other facilities to allow consumers to pay for their advice, such as making regular deductions from their initial investment.

However, the FSA says providers will not be obliged to offer these services, and will face an increased regulatory burden if they do.

Firms offering convenient payment facilities for advisers will be required to provide a flexible payment system, confirm charging details with consumers, and ensure adviser charges are not excessive to the detriment of the customer.

Furthermore, advisers will not be able to consider advice payment convenience when making their recommendation.

The impact of heightened regulatory requirements for firms offering payment systems could drive them away from offering these solutions, making it more difficult for consumers to afford advice.

Third party factoring will still be allowed, the FSA says, and advisers may also arrange credit facilities for consumers to pay for their advice.