RDR: FSA clarifies 'relevant market' term; issues panel warning

The FSA today clarified firms will still be able to call themselves independent even if they specialise only in a "narrow and distinct" field.

In its RDR Consultation Paper it says those specialising, for example, in ethical or socially responsible investments still qualify for independence "provided the whole of that market is considered".

Some advisers, and providers, had voiced concerns about a lack of clarity around what the FSA calls "relevant" markets.

"It remains important for an independent adviser to review the whole market for the field in which they provide advice in order to deliver genuinely independent advice," the paper reads.

"However, we recognise that it is possible to provide independent advice even if a firm specialises in a narrow and distinct field (for example, retirement planning).

"In this case, provided the whole of that specialised (relevant) market is considered, it is possible to provide independent advice."

Additionally, the FSA also issued a warning to firms using panels or those outsourcing market research and analysis to third parties.

It says panels must be both "acceptably broad" and reviewed frequently.

"We recognise that poor use of a panel or search tool can result in an outcome that is not in line with the client's best interests rule," the paper reads.