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With effect from the 31st December 2012, Financial Advisers will clearly describe their services as either ‘Independent’ or ‘Restricted’. Advisers who provide ‘Independent’ advice will consider all types of retail investment and protection products, which could meet your needs, from all firms across the market.

A ‘Restricted’ adviser will only be able to recommend certain products, product providers, or both. This means they might only offer products from one company, or just one type of product or service. Restricted advisers should disclose at outset, before undertaking any work for you the limitations of the products and/or services that they can provide.

Linda Woodall, head of investment intermediaries at the FSA said: “The changes will improve customer confidence – we want people to feel that they are getting a service from their financial adviser that is relevant to their circumstances and in their best interests.”

This is a very clear way of defining Independence and does not require a dictionary or lengthy explanation from the FSA or your adviser. Any advice that is not Independent is Restricted, there are no Fifty Shades of Grey.

Before the introduction of the Retail Distribution Review (RDR) we had:

Tied advisers, tied to the products of their own company or selling the products of one company.

We had multi-tied advisers selling from products from a pre-determined panel of providers.

We had Independent Financial Advisers who directed all their clients into their own in-house portfolios.

We had Independent Financial Advisers not permitted to offer the whole market.

We had firms advising clients on just one sector of the market, such as investments, under no obligation to disclose that restriction.

It is crystal clear that there were advisers who because of their own choice, their network’s choice, their firm’s product range, their investment strategy, or their business model, limited (Restricted) their consideration of some sectors of the market when advising their clients.

It is imperative that you understand any limitations that a “Restricted” adviser is subject to and how that may impact on the advice that you are provided with. This duty falls to you as a customer; if furnished with the correct disclosures at outset, you may not enjoy the regulatory protection that may otherwise be available to you should something go wrong.

It is our opinion from the representations made by Restricted advisers, that we have seen so far, that there is a tendency to use the word impartial, which is open to misinterpretation as Independent. We have also seen that companies have employed words such as “professional” and/or “qualified” as if that sets them apart, which it does not as all regulated individuals are professional and qualified.

It costs nothing to ask the questions and get the answers, our advice is that it is your choice and you should exercise it.