The Financial Conduct Authority (FCA) has outlined a number of good and bad practices around inducements in its final guidance.
With the paper stipulating that conflicts need to be tackled even before they have actually occured - potential conflicts - the FCA has suggested advisers should review their relationships with providers before problems arise.
Here's a round-up of what the FCA found during the research for its thematic review to help guide what the regulator is looking for.
The findings are broken down by key areas in which inducements between advisers and providers are likely to occur.
IT development and maintenance
The FCA said advisers were allowed to receive money from providers to develop their systems if this generates 'equivalent' cost savings either for the firm or its clients, and enhances the quality of service.
Where the FCA found advisers went wrong was when payments or services from providers went beyond what was required to be able to operate the systems provided by them.
Also, when providers paid for the development or maintenance of the advisers' general IT systems, which were not provided by them.
The FCA's concerns rest mainly on the idea that advisers may be tempted to channel their business towards those providers that paid them in IT favours rather than opt for the ideal product for the client.
Advisers are allowed to receive all sorts of training facilities from providers, however the quality of service to the client must be seen to have been enhanced as a result, the FCA said.
It also said it expected the facilitation of training to remain within reasonable limits. For instance, UK-based advisers should receive training in the UK.
Where training is given to one firm, on things like a provider's products or continuing professional development, it should also be offered to other firms and not have any correlation to the amount of business the adviser then channels to the provider.
Providers are allowed to show up at adviser training events to teach about their products and they are free to contribute to the cost - if the training is UK-based. However, they should then be prepared to offer the same service to other advisers as well, the FCA said.
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