Following the Treasury consultation on redefining ‘advice’, Aegon wants the Financial Conduct Authority (FCA) to clarify how this affects remuneration options where advisers choose to offer paid-for guidance.
The Treasury consultation proposes limiting the definition of regulated advice to apply only where a personal recommendation has been given. Aegon has welcomed this as removing the confusion where services can be classed as advice even when a personal recommendation is not given.
Steven Cameron, pensions director at Aegon said: “Since the Retail Distribution Review, the industry has moved away from commission to adviser charging where advice is involved. This has led to improved clarity and has further enhanced the professional standing of the adviser community.
“Strictly speaking, adviser charging is required only to pay for advice with a personal recommendation, plus what the FCA loosely refers to as ‘related services’. The market has gone further and operates on an adviser charging basis for advice whether or not this involves a personal recommendation. For investment business, commission is now very rare although may still be paid on limited ‘non advised’ or execution only sales.
“The greater clarity over what constitutes ‘advice’ could ironically lead to confusion over when the FCA requires adviser charging. With the tough transition away from commission now successfully achieved, we do not believe either the industry or the FCA would want to see that reversed. It would be helpful to receive early clarification from the FCA on this.
“We believe the Treasury paper opens up real opportunities for advisers to develop guidance models alongside regulated advice. And of course advisers should be able to charge for this, reflecting commercial realities. Where a firm chooses to charge, it needs to be clear on its options. There’s also a question over whether the ‘adviser charge’ label is appropriate for guidance.
“Looking at other strands of the Financial Advice Market Review, there is also a need to review what services the pensions advice allowance can pay for. We believe consideration should be given to making it available to pay for guidance where this is offered by a regulated firm as well as ‘advice’ as redefined.”
