Mike Barrett's heads up on regulation

The information contained in this page is for professional Financial Adviser use only.

First up on the regulation roadmap? The RDR and FAMR review.

All was not calm and bright in the advice community in December when the FCA flared its nostrils at ongoing adviser charging and price clustering of ongoing fees, as part of its evaluation of the impact of the RDR and FAMR. The industry responded by flaring its nostrils right back but now that the dust has settled it doesn’t look all bad – far from it actually.

The emphasis on ongoing adviser charging, rather than being a major issue, is mainly a reflection of the fact that advisers are moving towards serving more clients who both want and need ongoing advice. After all, the FCA itself also commented in the evaluation that ‘the advice market is moving in the right direction’.

If I’m correct about this then provided you as an adviser are following existing regulations concerning individual client suitability, then there should be no issues. So for now at least what you can and should absolutely do is make sure your processes around client suitability are absolutely up to scratch,  particularly the rules (and they are rules…) contained within PROD.

Amongst other things, PROD requires you to have clearly defined your target client(s), their needs, and the services you want to offer them. These services should be costed appropriately, i.e. the charges reflect the work involved. It’s not a huge exercise, but with the FCA taking an interest in this area now is a good time to ensure you are fully compliant. You can find out more with this webinar featuring none other than yours truly, discussing PROD in more detail

Also coming up in 2021…

Looking ahead on the roadmap of regulation this year we’ve got the FCA’s ‘investment pathways’ initiative due in February and while aimed primarily at non-advised clients, my blog next month will look at why advisers need to bear the pathways in mind for clients in drawdown.

There’s also the FCA’s business plan which we’ll get our teeth into over the coming months. Neither can we forget Brexit and what this will mean for carrying over the many regulations that our industry has followed every day. Given some of the anticipation around new ESG regulations created by the EU coming into effect early this year, it’s important to note that these will not be automatically carried over in the UK as first thought. Instead, the FCA is likely to include its own version of the regulations in its 2021/22 business plan – I suspect then that we’ll be talking about this one again come Spring.

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The information contained in this page is for professional Financial Adviser use only. If you are a private investor, please visit the Private Investor section or contact your Financial Adviser for more information.

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