As a self-confessed Donna Summer fan, the State of Independence is one of my favourite tracks.
But, in financial services, what does independence mean?
Independent versus Restricted
To try and understand the difference, it is worth consulting the FCA (Financial Conduct Authority) website.
Independent
The FCA state “The rules set out a new definition for independent advice, which is unbiased and unrestricted, and based on a comprehensive and fair analysis of the relevant market. This is designed to reflect the idea of genuinely independent advice being free from any restrictions that could affect their ability to recommend whatever is best for the customer.”
Restricted
The FCA state “Advice that is not independent will need to be labelled as restricted advice; for example, advice on a limited range of products or providers ” and then go to say “It is not acceptable for a firm to make a recommendation for a product that most closely matches the needs of the consumer, from the restricted range of products they offer when that product is not suitable”
Best Practice
Ideally, in the offshore IFA market, advisers should look to do the best for their clients. If this means that their products or services are not able to properly match their clients’ needs then they should refer to other firms that can help. This gives a great opportunity to network and provides a better outcome.
Why mention this now?
UK pensions are a key area for advice to expats and will continue to be. However, from next April , it is becoming clear that those in funded final salary schemes will only be allowed to transfer if the transfer is checked and signed off by a UK FCA registered adviser.
Any offshore firm that does not have a UK office with this transfer permission, or has not forged a professional relationship with a UK IFA firm, will not really be able to say “We are independent pension advisers” as they will clearly be restricted on the advice they can give.
Any offshore firm that wishes to offer full independent consultancy advice has a great opportunity to network with UK firms for the benefit of everyone.
But, in financial services, what does independence mean?
Independent versus Restricted
To try and understand the difference, it is worth consulting the FCA (Financial Conduct Authority) website.
Independent
The FCA state “The rules set out a new definition for independent advice, which is unbiased and unrestricted, and based on a comprehensive and fair analysis of the relevant market. This is designed to reflect the idea of genuinely independent advice being free from any restrictions that could affect their ability to recommend whatever is best for the customer.”
Restricted
The FCA state “Advice that is not independent will need to be labelled as restricted advice; for example, advice on a limited range of products or providers ” and then go to say “It is not acceptable for a firm to make a recommendation for a product that most closely matches the needs of the consumer, from the restricted range of products they offer when that product is not suitable”
Best Practice
Ideally, in the offshore IFA market, advisers should look to do the best for their clients. If this means that their products or services are not able to properly match their clients’ needs then they should refer to other firms that can help. This gives a great opportunity to network and provides a better outcome.
Why mention this now?
UK pensions are a key area for advice to expats and will continue to be. However, from next April , it is becoming clear that those in funded final salary schemes will only be allowed to transfer if the transfer is checked and signed off by a UK FCA registered adviser.
Any offshore firm that does not have a UK office with this transfer permission, or has not forged a professional relationship with a UK IFA firm, will not really be able to say “We are independent pension advisers” as they will clearly be restricted on the advice they can give.
Any offshore firm that wishes to offer full independent consultancy advice has a great opportunity to network with UK firms for the benefit of everyone.