The UK Financial Conduct Authority (FCA) has found that some life insurance companies still had arrangements, which could influence advisers, violating and working against Retail Distribution Review’s (RDR) aim of removing commission bias in financial advice.
A review published by the market watchdog claimed that two firms have been referred to enforcement in specific cases where the FCA identified potential rule violations.
Effective since January 2013, the Retail Distribution Review (RDR) made clear how much consumers pay for financial advice, what they pay for, and improved professional standards by introducing a minimum level of qualification for all investment advisers.
Although, many of the firms involved in this review have now changed their arrangements as a result of early action by the FCA.
The market regulator has also published the proposed guidance together with the review, to enable companies to have better understanding about how they should act.
Commenting on the findings, FCA supervision director Clive Adamson said that the changes the agency made to the retail investment advice sector were designed to mark a step change in the way advice was given.
"It signalled the end of advice that might be influenced by the commission payments made by product providers to advisory firms, and the start of a new era of trust and transparency between a firm and its customers," Adamson added.
Previously, the FCA ordered 26 life insurers and advisory firms to provide information pertaining to their service or distribution agreements; and subsequently it received and reviewed 80 agreements in all.