A spokesperson for the regulator, which replaced the FSA on 1 April, confirmed the review would be launched in either late August or early September to look specifically at situations where advisory companies are intentionally dodging the strict new rules.
While the full scope has not yet been confirmed, the spokesperson said the review could cover firms purporting to offer non-advised services when actually they qualify as advised.
Earlier this year the FSA confirmed it would be taking a closer look at execution-only businesses, which are an example of non-advised services. It did not rule out using mystery shoppers during this review as it did in the assessment of advice offered by high street banks ahead of RDR implementation.
Another element the “Distortion review” could include is an assessment of those passporting advisory services into the UK from within the European Economic Area (EEA), to ensure they are adhering to the new rules.
Confirming these firms are observing the ban on commission and have advisers with level four qualifications will be paramount.
The FCA spokesperson made clear the review had not been prompted by specific instances of companies flouting the “spirit of RDR”, but added the review had always been planned because the regulator knew companies would try and find ways of circumventing the legislation.
It is expected to take six to nine months to complete.
Meanwhile, it seems fears of a mass exit by advisers post-RDR may have been overstated, as shown by the latest FCA figures compiled by Matrix Solutions…
