It expects firms to review, and, if necessary, revise their existing agreements within three months.
As outlined in its original review in September, the regulator has made clear the practices that give cause for concern.
These were payments made by providers appeared to be linked to securing sales of their funds; financial agreements that potentially incentivised advisory firms to promote a specific fund to their advisers; and joint ventures where an investment proposition is jointly designed by providers and advisers which could create conflicts of interest and biased advice.
The regulator stressed firms are clear on Principle 8 which requires that the manage conflicts of interest fairly, both between itself and its customers and between one customer and another client.
Its SYSC 10 guidance also sets out specific rules requiring firms to “take all reasonable steps to identify the types of conflicts of interest that arise, or may arise, in the course of carrying out regulated activities or ancillary services between the firm and a client or one client and another”.
Clive Adamson, director of supervision at the FCA, said: “The rules on inducements and conflicts of interest are not new. However our review made it clear there were certain practices that did not stand up to scrutiny. In the guidance published today we are helping firms better understand our expectations.
“Now it is for firms to make sure any payments are legitimate, are in consumers’ interest and that potential conflicts are well managed.”
