Regulator said consumers could be misled over costs and services
The FCA has criticised investment advisers’ lack of clarity about the costs and nature of their services to customers.
The criticism follows the FCA’s second review of how financial advisers are implementing the changes enshrined in the Retail Distribution Review (RDR), which came into force at the beginning of last year.
The issue could have significance for general insurance brokers. Some observers believe regulators will eventually subject insurance brokers to similar scrutiny to that faced by investment advisers, and view the RDR as an indicator for possible future changes to insurance broking.
In its latest review, the second of three, the FCA found that 58% of investment advisers failed to give clients clear, upfront information about how much their advice might cost.
It also found that 58% failed to give information on additional charges and that 34% failed to give a clear explanation to clients of the service they were getting in return for an ongoing fee.
The FCA said its findings suggest some customers could be unaware of or even misled in relation to the cost of advice, the type of service offered, the nature of any service restrictions or the service they could expect from an ongoing fee.
FCA director of supervision Clive Adamson said: “The RDR has involved a major change to the investment advice landscape.
“While we have seen a lot of positive progress and willingness by advisors to adapt to the new environment, I am disappointed with the results of our latest review looking at whether advisors are clear with their customers on costs and services provided.”