Clarifying Sales Models’ Boundaries

The FCA has published a Finalised Guidance document FG15_1 ‘Retail investment advice: Clarifying the boundaries and exploring the barriers to market development’ which it hopes will clarify the different types of sales models, the boundaries between them and the associated regulatory requirements.

The document can be downloaded here.

The paper outlines differences between advice models used by firms, or could be considering, and gives examples together with the FCA’s views as to  whether they amount to a personal recommendation or not. It also draws together aspects from other recently issued guidance documents, for example the ‘fg 12_10 simplified advice’ and ‘fg 11_05 establishing the risk a customer is willing and able to take’, both have been featured in previous ATEB newsletter articles. 

There is a useful table on page 22 that summarises the different distribution models, potential limitations and conditions associated to each. There is also useful guidance on what constitutes model portfolios and what is considered to be discretionary management.

It is relevant to all financial intermediary firms dealing in investments and also includes additional information and guidance for firms using social media.

The 47 page document is difficult to summarise, but there is some very useful content that all advisers and principals should understand.

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

ATEB Compliance offers compliance and regulatory advice.

ATEB Suitability provides report writing software for the financial services market.

Our View

Sales models can be complex and risky so firms actively involved in these markets need to have an in depth and thorough understanding of the barriers.

Your independence could be compromised if you stray over a boundary.

Researching your chosen market is essential and must be continually assessed to ensure relevance of products for customers.

ATEB has been working closely with firms, including providers, to help them develop their sales models, centralised investment propositions and simplified offerings and we will be discussing the issues raised in this consultation directly and face-to-face with our clients.  

Action Required By You

  • The individual responsible for compliance should read the document thoroughly;
  • If your firm is affected by any of the issues then review your policies, processes and procedures;
  • ATEB clients should discuss any issues directly with their nominated consultant; 
  • If you are in doubt please refer to your ATEB consultant or contact us here.
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About the Author

Steve is an ATEB Director and has a deep understanding of all matter regulatory, built up over his 30 years + in the industry. With a training background and a technical brain, he overseas numerous complex projects and client implementation work.

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