Applying The Regualtory Framework In Practice For The Consummer Flashcards
What is the distinction between information and advice?
Information is stating the facts
Advice is an expression of opinion
What will constitute advice for a fianiacial advisor?
Causing someone to do/not do something because of what you say to them.
Therefore, anything an advisor says is advise unless it can be proven only factual information was exchanged.
How should advisors protect themselves?
Treat anything that could be considered advise as advise.
What categories can guidance be split into?
Provider guidance - information supplied by a representative of a product provider.
Generic guidance - non-product specific guidance
If a customer requires guidance/information, where can they get this?
The money helper service - formally the money and pensions service (MaPS) (single financial guidance body)
What is the purpose of the Money Helper service?
Set up by the government and paid for by the financial service in order to provide free, impartial information in respect of personal finances.
What are the core functions of the money helper service?
Pension guidance
Debt advice
Money guidance
Consummer protection as well as its overarching strategy to improve financial capability.
What is money helper also responsible for?
The provision of PensionWise.
When was pensionWise set up?
When the government relaxed its rules on drawing pension benefits in 2015.
What are the aims of pensionwise
To give people guidance on their options at retirement.
Do you have to pay for pensionwise.
No, and they offer face to face meetings.
What were the categories of financial advisors?
Tied - one company
Independent - no company
Multi-tied - multiple companies
Whole market - fees and no fees
What added to the polarisation of financial advisors
The retail distribution review (2012)
What are the categories of financial advisors now?
Independent
Restricted
- tied
- multi-tide
- whole market
What is expected for an independent advisor?
Whole of market advise on a wider range of products than simply packaged retail products.
The advisor should research the whole of the market, including more esoteric investments where appropriate. Should be unbiased and unrestricted.
What is expected from a restricted advisor?
Nature of the restriction is up to the advisor or their regulated firm to determine, provided the customer is made aware.
- tied selling the products of a single provider
- multi-tied selling the products of providers on their panel
Whole market - selling products from across the market but subject to restrictions. (E.g. Whole of market but only a certain area)
Where a customer has a certain need but a restricted advisor does not have the product to meet that need what is best practice?
Make them aware of the availability of an independent advisor.
What are bancassures?
Banks that offer financial services products as tied agents
Are all WoM advisors unrestricted?
No. To be unrestricted, the advice needs to conform to the standards set out by the FCA.
What does it mean to be non advised?
A client buys on a non- execution basis only
What is payment by advisor charge?
Commision is now outlawed on most products, and advisers instead charge fees.
Ongoing charges are only permitted where there is justified ongoing work.
Any fees dur must be disclosed to the customer in advance.
What must advisors do to unskilled and demonstrate professionalism?
Pass an appropriate level 4 exam with 30 months of starting work
Meet the requirements of continuing professional development.
Maintain an annual statement of professional standing.
What is the previous way in which information was disclosed to customers?
A prescribed format called services and costs disclosure.
How is disclosure now set up?
By the individual firm and disclosed in any manner they see fit.
(Designing their own method or using a template - templates removed from FCA handbook)