The FSA published Policy Statement 12/5: Distribution of retail investments - RDR Adviser Charging and Solvency II disclosures, feedback to CP11/25 and final Adviser Charging rules. In this paper, the FSA summarises the responses to CP11/25 and gives its response to the issues raised.
In November 2011, the FSA published Consultation Paper (CP) 11/25. 14 responses were received, from four trade bodies, the Financial Services Consumer Panel, five insurers, one bank, two investment managers and a life and pensions administrator.
In CP12/5, the FSA summarises the responses to CP11/25 and gives its response to the issues raised, including:
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Chapter 2 – facilitation of payment of adviser and consultancy charges under the RDR adviser charging rules;
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Chapter 3 – whether, once the RDR rules are in force, product providers should report investment amounts net or gross of adviser charges being facilitated.
The new guidance explained in Chapter 2 confirms that both of the following two methods can be used by product providers to facilitate payment of adviser or consultancy charges under the RDR rules on facilitation:
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paying the full amount received from the customer into the product and then deducting the amount (or amounts) of the charge from it; or
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deducting the initial charge from the amount received from the customer and then paying the remainder into the investment product.
The rules apply both to vertically integrated firms and to firms facilitating payment of adviser or consultancy charges advisers who are independent of their firm. Separately, the regulator also said it should be up to product providers and advisers to agree what should happen in the event a consumer cancels a product, and to ensure this is made clear to the consumer.
The new rules will come into effect as follows:
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rules on the facilitation of payment of adviser and consultancy charges – on 31 December 2012, at the same time as the main RDR Adviser Charging rules; and
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the rule on reporting investment amounts where payment of adviser charges or consultancy charges is being facilitated – this will apply to firms’ first full reporting period after 31 December 2012.
Policy Statement 12/5
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