FCA Definition of Independence

It has become clear over the past few years that a new standard is now in place for IFAs to actually evidence their independent advice. As the inventor of the Independence Checker said when he created the software “it’s no longer good enough to provide independent advice, IFAs have to be able to clearly demonstrate their process is independent, including  a file reference on each and every case of advice being given”. This was born out of information provided by the (then) FSA through the pre-RDR workshops. It is now supported by the FCA handbook which states:

 

“The requirements of the rule on independent advice (‘the standard for independent advice’) are that the personal recommendation is:

(a) based on a comprehensive and fair analysis of the relevant market; and

(b) unbiased and unrestricted.

 

The Retail Investment Product list is then provided; the clear guidance given is that to be described as an IFA, the firm must demonstrate that they have considered every available Product in every case and explain why some are suitable and why some are not. This has to be recorded.  This is what the Independence Checker does.

Post RDR the FCA have conducted some market reviews and their summary reports from these reviews confirm this process. To view the FCA’s latest review around the Independent requirement and standards – please view here http://www.fca.org.uk/static/documents/thematic-reviews/tr14-05.pdf