Adviser fees to be revised
The City watchdog, led by chief executive Hector Sants, said in its Retail Distribution Review (RDR) that financial advisers should charge customers an up-front fee, rather than taking commission from the companies whose products they market.
The suggestion is designed to eliminate the phenomenon of “commission bias”, whereby financial advisers offer products based on their expectation of a hefty commission.
Jon Pain, the FSA’s managing director of retail markets said the proposals were aimed at “regaining consumer trust and confidence in the retail investment market, building a more sustainable sector and making it easier for people to find their way around and get the help they need”.
The RDR also recommended that both independent advisers and those who work for financial institutions should be required to pass an exam equivalent to the first year of a university degree. The proposals, which end a review process which has lasted three years, would come into effect from 2012 if adopted.