The Financial Services Authority (FSA) is currently undertaking one of four planned thematic reviews into firms’ compliance with new rules following the Retail Distribution Review (RDR).
Here are the 39 questions the regulator is asking its sample of 50 firms – and which you should be thinking about too…
1. Are services offered by your firm to retail clients subject to the RDR requirements?
• Specifically, does your firm offer personal recommendations to retail clients in relation to any retail investment product?
• Please exclude basic advice or advice by a firm to an employer regarding their group personal pension.
• Please describe why the firm is no longer subject to Retail Distribution Review (RDR) requirements.
2. Has the firm carried out an exercise to identify its retail target market for RDR products?
• What is the target market? Why did you choose this market?
3. Is this different from the firm’s client base pre-RDR?
4. Which of the following describes the services your firm offers retail clients? (Please tick all that apply)
• •Independent advice (unbiased and unrestricted advice on the full range of retail investment products)
• •Independent with a “narrower” relevant market, (e.g. ethical)
• •Restricted advice: limited types of products (e.g. pensions only)
• •Restricted advice: the products of one provider
• •Restricted advice: the products of a limited number of providers
• •Basic advice (a specific way of giving advice on stakeholder products)
• •Non-advised services (including execution only sales)
• •Other Non-RDR (Please specify):
5. Please provide detail of your relevant market.
6. Please provide approximate detail of the proportion of your firms business that is through your firm’s independent scope of business.
• 0-25%
• 26% – 50%
• 51% – 75%
• 76% or above
7. What services does the firm provide under its independent scope of business?
• Please also provide the rough percentage of your independent RDR transactions that you estimate will be represented by those services in the calendar year 2013?
8. Does the firm provide products through a joint venture with an investment management firm?
• (E.G. via a new firm set up as an ACD for an OEIC)
9. What services does the firm provide under its restricted scope of business and please also provide the rough percentage of your restricted?
10. How does the firm provide disclosure to the client on the nature of restriction?
11. At what stage of the advice process do you disclose the nature of the firm’s restriction?
12. What training and/or guidance has the firm provided to its advisers to ensure they provide the correct disclosure during the advice process?
13. How does the firm monitor that advisers are providing the appropriate disclosure?
14. Has the firm carried out an exercise to assess what type of client the restricted service is not suitable for?
15. How does the firm ensure that its advisers are aware in what circumstances their service is not suitable for a particular client and that advisers turn these clients away where appropriate?
• (E.G. systems and controls in place such as training and guidance)
16. Has your firm produced a standard adviser charging structure?
17. How do you disclose to individual clients what the specific adviser charges will be for the advice/services for them?
18. At what point of the advice process does the firm disclose the specific adviser charges for the individual client?
19. How do you record that the adviser charge relevant for the client has been disclosed and agreed with the client in line with the FSA’s requirements for disclosure?
20. What choice is the client given for method of payment of the initial adviser charge?
• Where a payment method is allowed please provide the rough proportion (%) of clients who you expect to use this through 2013.
21. Does your firm allow clients to pay the initial adviser charge by instalments for advice on regular payment investments?
22. Are there any other circumstances in which you will allow adviser charging to be paid in instalments?
23. What arrangements does the firm have for recouping adviser charging where payment is by instalments and the policy is cancelled before all the adviser charges have been paid?
24. Are your firm’s initial adviser charges solely contingent on the advised product being taken up?
25. Does your firm have an ongoing advice charge?
26. What choice is the client given for method of payment when ongoing adviser charging is applied?
• Where a payment method is allowed please provide the rough proportion (%) of clients who you expect to use this through 2013.
27. What ongoing service(s) do you provide to clients in consideration for the ongoing adviser charge?
28. Do you provide ongoing services to those with products paying ongoing trail commission (on products sold pre-31.12.12)?
29. Where you have answered ‘yes’ to the above question, what ongoing service do you provide to clients for existing products/portfolio where you receive a legacy trail commission?
30. Where you provide ongoing service(s) for your ongoing charge and/or for trail commission received, how do you ensure that clients receive that service?
31. Where you offer both non-RDR and RDR services, how do you ensure it is clear to the client how they are paying for the different services offered by the firm?
32. How many platforms does your firm currently use for new clients?
33. Detail which platforms you use and indicate the approximate proportion of your business split between each platform you use (largest first).
• Please also indicate the approximate proportion of your business advised off a platform (by transaction).
34. Does the firm advise on products where the platform and/or product provider offers the option of facilitation for same product/scale of investment?
35. Where facilitation is offered by a product provider and/or platform provider do you allow the client to pay their adviser charge by an alternative method?
36. How do you record the client’s consent for the adviser charge to be facilitated by the platform or product provider?
37. What information do you provide to the product or platform provider in relation to the client’s consent for facilitation?
• (E.g. copy of signed client consent)
38. How do you ensure that the amount facilitated by the platform or product provider matches the amount agreed with the client?
39. Where adviser charging facilitation is used do adviser charges payable by a client vary from where this is not used?
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