The 196-page document has said while clients should be informed whether advice is independent or restricted, only truly independent advice should be commission-free. According to Peter Snowdon, partner for law firm Norton Rose LLP, this could overrule the FSA’s total ban on commission. Mr Snowdon said: “There has been concern in the market for some time regarding the interaction between the Commission’s MiFID II proposals and the FSA’s RDR. The Commission’s proposals allow restricted advisers to receive commission, which runs contrary to the outright ban proposed under the RDR."
The document said when the investment firm informed the client that investment advice was provided on an independent basis, the firm should:
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assess a sufficiently large number of financial instruments available on the market. The financial instruments should be diversified with regard to their type and issuers or product providers and should not be limited to financial instruments issued or provided by entities having close links with the investment firm.
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Not accept or receive fees, commissions or any monetary benefits paid or provided by any third party or a person acting on behalf of a third party in relation to the provision of the service to clients.
The document also outlined proposals on introducing safeguards for high-frequency trading.
Simon Mansell, managing director of Worcester-based Temple Bar IFA, said: “The issue is whether the FSA is working with Europe or ahead of it.”
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