Independent financial advice - regulatory bodies
The independent financial advice industry is strictly regulated in order to protect you.
Insurance companies
All UK insurance companies are subject to UK Corporate Laws. However, there are special regulations that only apply to insurance companies. These control the value of the risks the companies take on in relation to their financial reserves. These regulations are designed to ensure that your insurance company will be in a position to pay if you claim, and you can take independent financial advice to find the right insurance broker for you.
Financial services
The Financial Services and Markets Act (2000) is the most important piece of legislation affecting the promotion of financial services in the UK, including independent financial advice. The Act is highly complex but is primarily concerned with protecting the customer. The implementation of the Act is overseen by the Financial Services Authority (FSA). The FSA regulates all forms of the promotion of financial products and services including the activities of financial and mortgage advisors in the UK.
Compensation
One aim of the FSA is to ensure you have a route to compensation should it be proved that you received inadequate or poor independent financial advice. Every organisation giving independent financial advice in the UK must be authorised by the Financial Services Authority, with the exception of the sale and administration of personal loans, credit cards, second-charge loans and occupational pension schemes, which are regulated by other agencies.
Execution Only
The Financial Services and Markets Act makes a distinction between financial products bought as a result of a recommendation from a Financial Adviser and "Execution Only" business. Execution Only is where a customer is wholly responsible for the selection of the investment and therefore the financial advisers' sole responsibility is to process the purchase efficiently. Under Execution Only, the adviser bears no responsibility for the products suitability for the client's needs, so if you ignored the independent financial advice you have been given, and opted for a different product, this would be considered Execution Only.
Financial Services Compensation Scheme
The other central piece of protection for the customer is the Financial Services Compensation Scheme. This provides the customer with a level of protection if a financial organisation regulated by the FSA becomes insolvent and cannot properly meet its financial responsibilities to its clients following independent financial advice.
Financial Ombudsman
If a customer wishes to complain, then the complaint must be put in writing to the Compliance Officer for the business employing the adviser. Ultimately, if the customer has suffered financial loss as a result of independent financial advice, and cannot accept the proposed financial settlement, then the situation can be referred to the Financial Ombudsman. The Financial Ombudsman's service is free to the customer and they are wholly independent. The Financial Ombudsman's decision is usually binding on both parties.
You can have a brighter financial future. If you would like independent financial advice governed by a UK regulatory body call our experienced advisers today on 01424 777 156 or e-mail mike.robertson@mraltd.com
