Your Guide to Changes in Financial Services
Posted by: Swindells FP, on August 31, 2012.
On 1 January 2013 several important rules about how financial advisers work with their clients will change.
Swindells Financial Planning has been fully compliant with the forthcoming legislation for some time and embraces the transparency it will give investors like yourselves, who will know exactly what they are paying and for what service.
We have always believed the way the majority of financial services firms operate to be detrimental to investors and skewed in the adviser’s favour. How does your current advice firm behave?
Now is the time to ensure you are receiving the expert advice you deserve and Swindells Financial Planning can give you that.
Below are some questions and answers to help you understand the upcoming changes:
Why are these changes being made?
The Financial Services Authority, our regulator, is making changes to the way in which we do business which aim to ensure that you can have greater confidence in the advice you are given. The changes will:
- improve the clarity with which firms describe their services to consumers,
- improve the transparency of the cost of all advice services, and
- improve the professional standards of investment advisers.
What does this mean in practice?
All advisers must now tell you how much their services cost and agree with you how much you will pay, before they advise you.
An Independent adviser must consider all relevant options for you and do so free from any restrictions or bias. An Independent adviser will make personal recommendations to you without limiting (or restricting) their advice.
A Restricted adviser will only be able to advise you based on a limited range of product types or a selected group of product providers. Any adviser who does not meet the requirements to be Independent will be a Restricted adviser and must clearly explain to you what those restrictions are.
All advisers must pass a higher level qualification, if they haven’t already done so, and subscribe to a code of ethics ensuring they act with integrity and treat their customers fairly.
Do I have to do anything?
No. The changes are focused on investment advisers and the firms they work for, not on clients.
Although the new rules don’t come into effect until 1 January 2013, firms are planning the necessary changes now; reviewing the way they charge for their services, taking additional qualifications, and deciding whether they will offer Independent or Restricted advice.
What does this mean for Independent Financial Advice?
Some firms who currently offer Independent advice may, sadly, choose not to do so after 1 January 2013 and become Restricted advisers. Other firms may decide to offer both Independent and Restricted advice, and may only make Independent advice available to wealthier clients with more complex needs.
We will continue to offer Independent advice to all our clients because we know our clients value our independence and because being independent is important to us too.
Does this mean that getting advice will cost me more?
Investment advice has never been free. The cost of advice is often hidden within the charges of the product that you buy, and that price is currently set by the product provider, not you, the investor. These changes mean you will be asked to agree with your adviser how much he or she gets paid, rather than that decision being made for you by a product provider.
This change does not force you to pay a fee, by writing a cheque for example. If you prefer, you may agree with the adviser to have their initial and on-going charges taken from your investments.
What professional standards will my adviser have to meet?
The FSA has introduced a code of ethics, to make sure advisers act with integrity and treat you fairly. They have modernised and raised the minimum level of qualifications advisers must have, and enhanced their requirements for how advisers keep their knowledge and skills up to date.
We already adhere to these ethics and exceed by far the new minimum professional qualification and on-going development requirements.
Contact us now if you have any other questions about these changes and how they might affect you.