The Financial Conduct Authority (FCA) has warned execution-only services could be subject to advice rules if customers believe they have received advice.
FCA technical specialist Rory Percival has put a disclaimer on a website to inform "this is not advice". Percival said it will be down to whether a client thinks they have received advice or not.
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Speaking at a roundtable on post-RDR distribution, Percival said: "I don’t think the regulations are absolutely clear cut to allow you to say ‘that is advice and that is not’.
"In practice, the customer’s perception is a very key determinant of whether it is advice or not. One of our lawyers, within what was the FSA, said to me, ‘If it looks and feels like advice, it probably is advice’, and that is actually quite a good test."
A number of execution-only businesses have launched recently and the FCA said the regulator is concerned about the potential for firms to describe their service as non-advised while continuing to offer a form of advice. The regulator says it will look at the issue as part of its thematic review of non-advised business in the third quarter.
Informed Choice recently launched an execution-only investment service. Managing director Martin Bamford says: "Simply sticking a notice up and saying this is not advice is not enough. As soon as you start talking about best buy lists and featured funds it is quite right that some customers would perceive they are receiving advice."
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