The UK Financial Conduct Authority (FCA) has issued new guidance making clear that financial advisers and product providers share responsibility for managing potential conflicts of interest relating to distribution and service agreements.
The guidance is a response to research conducted by the FCA which found that payments are still being made in the British financial services industry that may result in advisers favouring one product over another, in contravention of the Retail Distribution Review’s conflicted remuneration ban.
“The rules on inducements and conflicts of interest are not new. However, our review made it clear there were certain practices that did not stand up to scrutiny,” said FCA director of supervision Clive Adamson.
“In the guidance published today, we are helping firms better understand our expectations.
“Now it is for firms to make sure any payments are legitimate, are in consumers’ interest and that potential conflicts are well managed.”
The FCA’s review found a range of incentivisation payments were being implemented by some financial advice firms and product providers.
Moreover, the FCA identified that joint ventures present particular opportunities for conflicts of interest to arise.
