The Financial Services Authority (FSA) has clarified that advisers who only advise on passive investments do not meet the requirements needed to call themselves independent.
In its final Retail Distribution Review (RDR) newsletter, the FSA said it had received a number of enquiries about whether an advisory firm can meet the independence rule if it only recommends passive investments. However the watchdog said that a firm's review process should always start with the consideration of the whole of the relevant market in an unbiased and unrestricted way. It did state that it may be that passive investments are suitable for a large number of a particular firm's customers, in which case a firm would be expected to be able to prove that was the case. Where ...
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