FCA set to include support services firms in payments clampdown


The FCA is investigating ways of ensuring support services firms are brought under new rules which will prevent adviser networks and nationals profiting from provider marketing payments.

In March, Fundweb sister title Money Marketing revealed the regulator was planning to impose a “cost-only” rule on provider payments to adviser firms for services such as training, conferences and seminars due to concerns the deals could be used to secure distribution.

Money Marketing also revealed the regulator was considering whether to bring support services firms into scope.

It is now understood that the FCA wants support services firms to be included in the rules, however there are legal hurdles for the regulator to overcome because such firms are not normally regulated.  

The FCA has told providers of its intention to ensure that “where the sole purpose of a company which is not regulated is to service the intermediary market” the company should be treated as a regulated firm for the purpose of marketing payments.

An FCA spokesman says: “The FCA can confirm it will be publishing guidance on inducements for consultation in September.”

Support service firms are split on whether they should come under the new rules. Threesixty Services managing director Phil Young says: “The FCA is right to focus on support services firms. If profits from marketing payments are subsidising support services to directly authorised firms, it creates a bias in the market.”

SimplyBiz joint managing director Neil Stevens says: “Where any firm has a ‘community of interest’ with financial advisers it is necessary for the FCA to ensure payments from product providers do not contravene the regulatory objectives in providing an alternative to commission or profits that in turn subsidise adviser charging. 

“We believe therefore that a robust regime and clear rules already exist for this purpose and a careful examination of the arrangements in place will quickly determine those that have no place post-RDR.”