Advisers want FSA guidance on what terminology to use in client agreements after it contacted two firms over unfair contract terms (UCTs).
AP Financial Services and chartered financial planners Beacon Financial agreed to redraft a commission clawback clause in their standard terms of business (ToB) letters after clients complained.
It was the third time in 12 months the FSA has written to financial advisers over UCTs.
It intervened in January last year following ToB letters IFA network The On-Line Partnership, now trading as IN Partnership, had as standard across its 220-firm adviser base.
In that case, it recommended the company change a ToB term that read ‘I confirm that I have received, read and understood this agreement and agree to the terms set out within' to an alternate phrase.
Last year, the regulator unveiled an optional template for its combined IDD and menu document, but it does not issue guidelines for ToB or client agreements.
"Guidelines should be issued because client agreements form a key part of TCF," says Derek Frost, owner of Surrey-based IFA The Melia Partnership.
"We are only provided with examples of good and bad practice, and advisers may interpret TCF principles differently."
Martin Bamford, managing director of Informed Choice, says his firm changed its client agreement terms following The On-Line Partnership's undertaking.
"Individual firms do have, and should have, the freedom to tailor their contracts accordingly," he says. "But I think the wording of client agreements should be subscribed to some extent."
Some advisers, including Churchouse Financial Planning founder Keith Churchouse, say client agreement guidelines would be unhelpful because firms operate differently.
The FSA's actions have again raised the issue of caveat emptor - or buyer beware.
Some advisers argue consumers are afforded too much protection in financial services and claim the financial ombudsman (FOS) pursues a "guilty until proven innocent" agenda against advisers.
Richard Gough, director and compliance officer at Castle Court Consulting, says: "I don't think the balance is fair. But you have to remember there are some clients for whom a piece of advice will be complicated and others for whom that same advice will be fairly straight forward."
Churchouse says pressure should be "brought to bear" on both sides. "The FSA has done a lot on the financial education side, which is great, but the sole objective is that we end up with a lot more satisfied clients, and that is all that matters."
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