Compliance

New Disclosure Requirements for UK Financial Advisors

Stephen Harris June 1, 2005

New Disclosure Requirements for UK Financial Advisors

The UK’s financial regulator the Financial Services Authority has announced that as from today consumers in the UK will find it easier to as...

The UK’s financial regulator the Financial Services Authority has announced that as from today consumers in the UK will find it easier to assess investment products and whether their advisor is good value for money as new disclosure rules for depolarisation (the UK financial sector deregulation of the independent finanical advisor market) come into force for all financial advisors.

Two “keyfacts” documents, entitled "about our services" and “about the cost of our services” must now be provided by all advisors. These will give consumers much clearer information earlier in the sales process about the type of advice and level of service being provided by the advisor.

A “menu” of commission rates, providing a benchmark showing the average cost of advice, must also be provided for the first time. Under the new rules advisors who call themselves independent will have to offer consumers fee-based advice.

The disclosure rules are part of the official commencement of depolarisation after a six month transition period and gives the industry the ability to be more flexible in providing advice to customers and to offer a wider range of products.

"These keyfacts documents will make it clearer to consumers that even when financed through commission, advice comes at a cost – and it is consumers who ultimately pay through the charges levied on products they buy. In line with our aim to help consumers achieve a fair deal, we expect this to result in more competitive pressure being brought to bear on commission levels and a need for firms to explain more clearly the services they provide," said Dan Waters, director of retail policy at the FSA.

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