“It’s a jolly sight harder staying independent than I thought”

The FSA began its final round of RDR surgeries last week, less than a year before full roll-out of the new rules. But surprises continue to crop up...

Last week, IFAs were granted a rare opportunity: a chance to challenge the regulator on its home turf. The FSA hopes its series of surgeries, which began at Canary Wharf and end in June in Edinburgh, will allow advisers to air their grievances on RDR – before it’s too late.

Plenty has happened since the regional RDR roadshows in August last year. A list of the most common questions asked, published shortly after by the FSA, makes for interesting reading. Advisers were more interested in practicalities, like a clear definition of continuing professional development, or the publication of a full list of 'retail investment products'.

Times have changed, said Yvonne Goodwin, founder of Yvonne Goodwin Wealth Management. “We all know the basic gist of the FSA’s intentions, but it’s now down to the final detail.”

But if you believe attendees from the Canary Wharf leg, that detail may not be as final as the FSA would like.

Arthur Childs, MD of Arch Financial Planning, raised the possibility of an online guided advice service for his clients who did not want – or could not afford – full independent advice in 2013. But he was told in no uncertain terms by the FSA this would compromise his independent status.

“We were hoping we might have some sort of system, via our website, where clients could follow the advice through, and we would earn some money in the form of fee at the end, if they bought an annuity for example,” Childs said.

“The FSA still has not decided what it is doing about this type of guided advice. At the moment it’s either independent advice, execution-only or you throw ex-clients to the banks.”

The position is further complicated by the FSA’s endorsement of the Money Advice Service, said Goodwin. Would an independent adviser be allowed to offer this kind of service? “It’s great if advisers want to produce an online service, and surely to the detriment of consumers if they can’t.”

It does appear that the regulator is yet to rule on this quirk, but a spokesperson attempted to explain. Advisers may be able to offer restricted and independent advice, she said, but there are number of practical difficulties.

“If a firm provides both independent and restricted advice, there are a number of ways in which they could make it clear to clients that they offer both,” she said. “For example, the firm may have a name that does not include ‘independent’ and offer clients who approach them a choice of names in order to clearly separate their independent advice and restricted advice business arms.”

Still, said Childs, the surgeries are well worth attending, even just to get the FSA thinking about the adviser mentality. “It’s going to be a jolly sight harder to remain independent than I thought,” he said. “But at least I didn’t wait until December to find out.