The Financial Conduct Authority (FCA) director of life insurance and financial advice Debbie Gupta has warned advisers to reconsider their charging structures.
Speaking at the Personal Finance Society's (PFS) annual conference on Thursday (28 November) in Birmingham, Gupta stressed the FCA would be "really concerned" if long-standing clients were priced out of advice at the point when they need advisers the most.
She said most advisers charge clients a percentage of their assets and is a structure that works well. However, Gupta encouraged advisers to consider whether this is an appropriate model for clients who are building their assets.
"Client circumstances may get more complex," she said. "As they age, they may become more vulnerable." Therefore, advisers should ensure that the way they charge their clients is in fact the best way for the customers.
The FCA director also acknowledged that re-evaluating fees can be an emotive subject for advisers. "We don't expect advisers to be charities - everyone should be paid a fair amount for the services they provide - but we do expect you to consider conflicts that will arise to ensure this does not lead to consumers suffering harm."
Meanwhile, PFS chief executive Keith Richards said that, from a fee basis, advisers need to be very alert to the perception of conflicts of interest.
He said the regulator is encouraging advisers to regularly test whether they are offering "fair value" for their clients, adding that advisers should consider whether their charges are "fair and proportionate" for what the client benefits from, rather than what they provide.
"The regulator is challenging value, rather than price," he added. "And that is something as a professional body that we would support, as would most firms."
PFS conference 2019