fsa contacts firms over rdr and reiterates

The UKs Financial Services Authority has today contacted a number of advisory firms, as well as lawyers and accountants, which it believes may wish to revoke their permission to provide investment advice after the implementation of the Retail Distribution Review.

fsa contacts firms over rdr and reiterates

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In the letter, the FSA warns the recipient company that if it fails to inform the regulator it no longer wishes to hold permission to provide investment advice by 31 July, the company will remain on the record and will be required to report to the FSA under the new RDR regulations.

The letter also sets out the products it deems “retail investment products” and which will therefore fall under the scope of the RDR – reiterating guidance published in June this year (as covered by our sister publication Portfolio Adviser).

Under the RDR, retail investment products are defined as:

  • 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 that offers exposure to underlying financial assets, in a packaged form that modifies that exposure when compared with a direct holding in the financial asset; and
  • a structured capital-at-risk product.

Sam Instone, chief executive of UK-based international advisory firm AES International welcomed the clarification on retail investment products.

“It is great to see the FSA clarifying that life polices, collectives and structured products do indeed classify as retail investment products and a personal recommendation made regarding these is indeed investment advice,” he said.

“While this may seem obvious to most IFAs, many insurance salesmen have used the previously opaque definition to masquerade as IFAs for too long. The RDR now seems to be positively changing this.”

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