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The FSA yesterday warned it will take a "dim view" on any adviser firm seeking to build trail business in a bid to "get around" its adviser charging proposals.
Sheila Nicoll, FSA director of conduct policy, told delegates at the annual Tax Incentivised Savings Association (TISA) conference all sales must still meet the regulator's rules on suitability.
Earlier this year the FSA, in response to concerns from advisers about retrospectively applying adviser charging to legacy business, confirmed any pre-existing trail commission "can continue as before", adding "we will not require advisers firms to revisit business conducted before the [2012] deadline".
But Nicoll warned: "We have heard there are some firms who might be thinking of taking the opportunity of the period between now and implementation to build up business with trail commission to, in a sense, get around our proposals and to suggest products in which they receive high remuneration which is not be right for the customer.
"I would just say that those sales still must meet our rules on suitability. We will take a dim view of such detrimental behaviour."
Nicoll also said the regulator remains committed to RDR and said legal challenges to its proposal to raise the minimum qualification standards were futile.
"A word of caution to advisers who think they might successfully challenge our ability to raise qualification levels - we have taken very clear legal advice on this and our proposals are legal," she said.
"The FSA can remove individual licenses to trade if an adviser is deemed incompetent."
Nicoll went on to say she understands the "apprehension" over taking exams and pledged the regulator would continue to listen to other proposals for assessing advisers' capabilities.
She also revealed the FSA will publish a new RDR consultation paper next month, addressing professional standards and a potential 'read-across' to the protection market. This will be followed by a review in March 2010 which will look at charging and advice.
When asked if the 2012 timeline is still achievable, Nicoll said: "Yes - we remain committed to it and think it is practical."
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| Comment | Firms warned against building trail business pre-RDR |
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Trail or Fees?
Would Ms Nicholl care to provide a meaningful explanation of her considered difference between building 0.5% trail commission pre-RDR and charging clients a 0.5% annual fee post-RDR (partcularly given the situation that both can be taken from the funds under management)?
Posted by: You must be joking
Sieg Heil Fraulein Nicoll F SS A
I can only conclude that the FSA is under great pressure as their Mugabe like edicts are increasingly irrational Sieg Heil Fraulein Nicoll, F SS A director of conduct policy!
Posted by: Martin Ludwig Bormann
FSA Obituary
All at the FSA seem to assume that Labour will win the next election since no spokesman ever mentions what will happen if Conservative policy to abolish the FSA takes effect. If it does then Ms Nicholls statements are hollow rhetoric.
Posted by: Barry Painter
Unbelievable!
Like a lot of IFA firms we have always built trail into our business to enable service standards to be maintained and paid for unlike some 'upfront commission' short sighted firms. It has always felt like the right thing to do and clients get the regular reviews and advice etc as neccessary. Now we get a statement from the FSA that they also dont like this and will take a 'dim view'. 'DIM' seems to be the perfect word for these out of touch cronies at the FSA.
Posted by: Gary
PMT
This woman is out of control and should be sacked.She ended the RDR consultation period early, by stating it would go ahead regardless. She takes a dim view of trail commisssion ,initial commission and no doubt fees in the future. So, tell me how are we to pay the FSA fees if we are unable to earn.Just ignore her it must be the time of the month. Parasite !
Posted by: Peter Taylor
Opps a daisy silly girl
Opps a daisy silly girl has put her stiletto heal in it again! It was the very same Ms Nichols that announced the consultation results before the end of the consultation. Power tends to corrupt, and absolute power corrupts absolutely, and here you are again Ms Nichol proving true every negative thought ever held about the FSA. You testify to the view that the FSA is a parasitic bully past its sell by date. It has failed every regulatory test put before it and you are the personification of everything that is wrong with this unelected quango and the government behind it. With luck Ms Nichol you’ll be out of job long before I can say 10,000 IFA’s! Sir Les Patterson Cultural attaché to the Court of St. James's
Posted by: Sir Les Patterson
2,583 are right
Well 2,583 people have signed to say they have no confidence in YOU (or your pals at the FSA) to regulate either competently or fairly. Go have a look and ask yourself how it feel to judged incompetant by so many. You might think the livelihoods of 10,000 people don't matter a jot but the spotlight is on you and your job come the next election: http://petitions.number10.gov.uk/FSANOCONFIDENCE/
Posted by: Brüno Gehard
Full context
It would appear that the writer of this article may have slightly misled the readers with regard to the context of Ms Nicholls comments. A full copy of her speach can be found at http://www.fsa.gov.uk/pages/Library/Communication/Speeches/2009/1118_sn.shtml
Posted by: You must be joking
FSA bonkers
This sort of pointless scaremongering sugggests over-staffing at the FSA
Posted by: Allan Reid
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A puzzle
Not being sure of the context of this pronouncement, I am completely puzzled by it-is there something inherently wrong in the fSA's view with building trail payments from clients' investments? If there is can we be told exactly what?
Posted by: graham worrall