Financial advisers made to declare fees

Author: By Rachel Stevenson

Consumers visiting a financial adviser will be told upfront how much they are paying for the advice they are given and they will be able to see for the first time how this compares with other advisers, according to new proposals published yesterday by the Financial Services Authority.

The move is aimed at bringing about a clampdown on commission-driven sales of savings and investment products.

Advisers will have to show customers a menu offering options of how to pay for their advice and how this compares with the industry average for the same service.

“We want to arm consumers with information that gives them a better understanding that the cost of advice can vary between firms and that different options exist for meeting the cost of advice.

“Consumers will then be better equipped to shop around, compare costs across the market and get better deals,” David Severn of the FSA said yesterday.

At present, advisers disclose, as a cash sum, what they receive as commission for selling a product, but research by the FSA has found that customers are not clear about how much financial advice is costing them.

“Many consumers remain reluctant to pay upfront fees for financial advice. If consumers want their adviser to take commission, that is their choice. We want consumers to be clear about the amount of commission being paid so they can have confidence that the financial advice they get is not being influenced by the level of commission,” Mr Severn said.

Customers will be presented with a guide that spells out the services provided by the company and would then show what the cost would be in fees and/or the maximum commission is on a range of financial products.

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