Advisers must "wake up" and address changes being brought in by the RDR, as last week's paper represents the FSA's "point of no return", says the Personal Finance Society (PFS).
In its final rules on adviser charging and labelling post-2012, published on Friday, the FSA confirmed investment advisers will be banned from taking commission and non-independent advisers will be labelled ‘restricted'.
If restricted, advisers must disclose their non-IFA status to customers before advising them, though not using a mandated script as had been mooted. Provider-owned advisers will not have to disclose their ownership status to customers.
PFS chief executive Fay Goddard describes last week's announcement as a "wake-up call" for advisers, who must adapt their business models if they have not started already.
"[It] is a clear indication the RDR has reached 'a point of no return' and that it will now happen," she says. "Advisers need to focus on their business plans to ensure they meet the requirements in time."
"For those who hoped this would all go away, [it] is a wake up call, but as long as they act quickly they can prepare themselves for the new world the RDR will bring."
But while IFAs are being told to adapt or die, non-independent advisers have been told they will not have to follow an FSA-prescribed script when informing customers of their restricted status, a move criticised by some IFAs for falling far short of the transparency level they must meet.
Baigrie Davies director and newly appointed FSA board member Amanda Davidson disagrees with the regulator's decision not to force provider-owned adviser firms to disclose this fact, but says the success of the FSA's disclosure strategy for restricted advisers will rely on the intensity of its monitoring process.
"Prescriptive wording was obviously deeply unappealing to restricted advisers," Davidson says. "It is not unreasonable to make disclosure sympathetic to the business model, but the FSA must think carefully about how to monitor this to keep in with the spirit of disclosure."
The FSA must be prepared to come down hard on those restricted advisers who seek to present themselves to consumers as independent, she says.
"We know clear blue water exists between independent advisers and those who are not in terms of the sophistication of advice, but one must convey this to the consumer.
"It is not ethical to try to pass yourself off as independent if you are restricted, which firms must take responsibility for, as the FSA must take action where attempts not to properly disclose are made."
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