UK Financial Services, regulations and ethics

In this chapter, we answer certain key questions in terms of following an industry standard process of advice and recommendations. Primarily we will deal with a process that should be followed if the client is categorised as a retail client. Under the FCA’s Conduct of Business rules these clients are afforded the most protection. This section uses brief key summary points only.

Guidance involves providing a customer with information about products to allow them to make an informed choice or whether or not it is suitable for them and their needs. Advice can only be given after a detailed analysis of a client’s circumstances has been undertaken by a qualified and authorised financial adviser, who will then provide recommendations specific to their circumstances.

What must be done in the first face to face communication with a client?

Answer

Provide a business card

Confirm the identity of the adviser and the firm they work for

Confirm the advice offered – independent or restricted

Establish whether the client is a retail client, professional client or eligible counterparty

List the five key need areas of clients in priority order.

Answer

Protection

Inc...

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...ty report). The latter will detail the client’s financial situation, in terms of needs and priorities, what is and is not currently being met by existing arrangements, formal recommendations and how they meet the client’s needs incorporating their features, benefits, tax treatment etc and finally, any unresolved needs.

Assuming your client agrees with your recommendations and proceeds with them, outline the considerations you would take into account when carrying out ongoing reviews.

Answer

Any changes in their personal circumstances

Any newly available products

Any changes in taxation rules and other legislation

Using tax allowances and exemptions

Investing in tax advantaged products, e.g. ISAs

Your client may want advice on aspects of their finances (e.g. mortgages, debt, legal implications of divorce) that you are not sufficiently knowledgeable about to assist with. What if anything can you do?

Answer

There is a difference between providing guidance and providing advice. Guidance involves providing information to help someone move forward in a situation whereas advice is a detailed process carried out by professional specialists in the particular area.

Many organisations provide generic advice as a normal part of their business – banks, life companies, trade unions, Citizens Advice Bureau (CAB) and charities. However, the Gove...

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...her Pension Wise, Money Advice Service and the Pensions Advisory Service (TPAS) into a single financial guidance body. It provides guidance to consumers through the MoneyHelper brand.