Financial Conduct Authority chief executive Martin Wheatley says he is concerned that bias still exists under certain RDR adviser charging structures, particularly those based on a percentage of assets invested.
Fundweb sister publication Money Marketing reported last month that the FCA is said to be “unsettled” by early post-RDR research which suggests a lack of understanding among clients about advice charges.
Responding to the article at a press conference after the FSA final public meeting in London today, Wheatley said: “It is an interesting point about customers not understanding charges. I think the regulated community understands what is required of them, but if the customers are not clear, then I would question whether those particular firms have done a good job of explaining it.”
Wheatley said he believes the system under the RDR is “much cleaner” than the previous commission model, but admitted the trend towards taking the adviser charge from the product as a percentage of assets could still be skewing the market.
He said: “In some cases, firms are charging a percentage of product investment, and clearly it takes away product bias in the sense that we are no longer seeing firms recommending particular products because of the payment that comes to them, but it does not take away ‘dealing bias’, because if you only get paid if people buy a product, then you are going to want them to buy a product rather than pay off debts or do something else.
“There are some concerns about whether that is entirely compliant with the philosophy we have set out, and it is something we will come back to.”