Question 1: Post 2012, can someone who doesn’t have an appropriate RDR qualification carry out a factfind or other client-related activities?
Answer: Yes, as long as the individual is not making a personal recommendation or advising on the merits of buying or selling a particular investment. Individuals doing other roles within a firm will still need to be competent, which includes holding other appropriate qualifications for other activities described within our Training and Competence sourcebook.
Question 2: In preparing to meet the professionalism requirements, how should advisers expect to get help from accredited bodies?
Answer: Accredited bodies will help firms meet the professionalism requirements and will issue retail investment advisers with their Statement of Professional Standing (SPS). Firms must obtain an SPS for each retail investment adviser from the end of 2012.
Question 3: What is structured continual professional development (CPD)?
Answer: Structured CPD is designed to achieve a defined learning outcome and, like unstructured CPD, is capable of being independently verified. To fulfill the CPD requirement, we would expect firms to: Identify the learning need, identify the method to fill that learning need, be able to demonstrate that the learning need has been filled, and document the structured CPD activity.
Question 4: If I consider a product, but I don’t feel comfortable recommending it due to its risky nature, can I still call myself independent?
Answer: A firm, after considering the market, may take the view that certain products are not suitable for their client base and not carry out a comprehensive review of the market for these products for each of their clients. If the product is not suitable for a client, for example it does not match their risk profile, it should not be recommended. However, a firm should be aware that there may be some clients who these products are suitable for, and the firm should be able to recommend them if this is the case.
Question 5: If a firm has three restricted advisers, but as a team they can advise on all retail investment products, can the firm hold itself out as independent?
Answer: No. No one in a firm that holds itself out as independent should make a personal recommendation to a retail client unless that personal recommendation is based on a comprehensive and fair analysis of all retail investment products in the market.
Question 6: Where a limited company has ‘independent’ in its registered name, but will not offer an independent service in the future, will they need to apply for authorisation again?
Answer: A firm does not need to apply for a new FSA authorisation. Where a firm is simply changing its name with no impact on the regulated activities undertaken or the scope of permissions, the firm needs to complete a standard data change form.
Question 7: What is in the list of (g) retail investment products?
Answer: The full list of retail investment products is: a life policy, a unit, a stakeholder pension scheme (including a group stakeholder pension scheme), a personal pension scheme (including a group personal pension scheme), an interest in an investment trust savings scheme, a security in an investment trust, any other designated investment which offers exposure to underlying financial assets in a packaged form which modifies that exposure when compared with a direct holding in the financial asset, and a structured capital-at-risk product.
The inclusion of (g) means that our rules capture advice on products that do not fit within (a) to (f) and (h), but which produce broadly comparable economic effects for retail investors as other retail investment products.
Question 8: What is meant by relevant market in the context of independent advice?
Answer: A relevant market should comprise all retail investment products which are capable of meeting the investment needs and objectives of a retail client. To use the example of ethical products, for clients who only want these, it is clear that a range of products would never be suitable for them, namely non-ethical products. Therefore, the relevant market for these clients would not include all retail investment products, but would include all ethical retail investment products. Relevant markets are defined by client needs, not by any other factor. We expect specialised relevant markets to be relatively rare.
Question 9: If I charge 1% for a £50,000 investment and 1% for a £250,000 investment and the work is the same, am I not going against the principle of treating customers fairly?
Answer: The charge should reflect the service provided. It is up to the adviser whether they charge a flat fee, hourly fee or percentage. The charging structure must be shown to the client in good time before the service is provided. The costs should be clearly disclosed and explained to the client, so that the customer understands the charges and agrees them.
Question 10: We can only receive an ongoing income for an ongoing service, post RDR. I have agreed a service level with some of my clients, which involves them being ‘on the books’ and I am available on a reactive basis to deal with any issues that arise. Is this acceptable under adviser charging?
Answer: Where the ongoing charge is for an ongoing service (instead of relating to a regular payment product) it is up to the adviser and client to agree the ongoing service and the charge for that service. However, to be able to make an ongoing charge, the service must be a genuine service for the provision of personal recommendations or related services and not just, for example, a vague statement that the adviser is available on the end of a phone at any time.
However, it is also acceptable, where a recommendation is for a regular payment product, that the adviser charge can be payable over time, without further ongoing advice.
Question 11: If my firm does not employ a pension transfer specialist, does that mean my firm cannot hold itself out as independent?
Answer: A firm can be independent even if they don’t have a pension transfer specialist, because this should not constrain the extent to which a firm can consider personal pensions in giving advice to their clients. However, all qualified advisers should be able to identify clients for whom a pension transfer or opt-out may be suitable, and be in a position to refer clients to an external pension transfer specialist if they do not have in-house expertise.
