There will come a time in each of our adult lives where we need a helping hand with our finances. You’ve worked hard for the money you’ve earned. Therefore, it’s understandable if you feel uneasy about trusting a financial advisor with your money.
If you’re wondering whether financial advisors have fiduciary duty, it means you’re savvy enough to do your homework. But don’t worry – we’ll explain what it is and take you through the safeguards in place to protect you when you take financial advice.
What is fiduciary duty?
Fiduciary duty relates to the responsibilities of any person who acts as a trustee for another. In the finance world, this is anyone who makes monetary decisions on behalf of another person. This trust can apply to banks, wealth managers, financial advisors or any other person or body that manages money for others.
How does fiduciary duty apply to financial advisors?
Under fiduciary duty, a financial advisor must put their client’s interests first. This means understanding their client’s needs and offering the lowest-cost financial products and solutions.
In the UK, advisors must adhere to the conduct of business rules set by the Financial Conduct Authority (FCA). Yet, they’re not legally bound by fiduciary standards. The good news is that the FCA is working towards improving the industry and keeping you safe.
The FCA introduced the Retail Distribution Review (RDR) in 2012 and Financial Advice Market Review (FAMR) in 2015. Both of these reviews set the standard for the industry. They assess whether consumers’ needs are being met and offer solutions that ensure they’re supported and protected.
Since their launch, the FCA has rooted out many of the ‘bad apples’ that have given the financial advice profession a bad name. This has helped the financial advice market progress, with many advisors proudly showcasing their FCA affiliation on their websites.
The Financial Conduct Authority
The FCA, the regulatory body for the UK financial services sector, regulates all practising financial advisors. Financial advice is one of many financial service activities regulated by the FCA. Some circumstances where authorisation isn’t required include solicitors or accounting firms.
The FCA champions fair treatment for all consumers and their tough requirements must be satisfied before advisors or their firms can operate in the UK financial market.
Here are some ways the FCA ensures you get quality advice and support with your finances.
The Financial Services Register
The Financial Services Register offers you a chance to vet a firm you’re thinking of working with. It’s wise to check their listing. See which services are regulated and confirm they have permission to perform the activities they’ve offered to you.
The FCA and The Pension Regulator’s joint campaign helps consumers and their advisors spot pension and investment fraud schemes. Their dedicated ScamSmart page offers helpful advice on keeping yourself safe. You can also learn about common scams to watch out for and what to do if you think you’ve become a victim.
The handbook includes all the rules and guidance that financial advisors, banks, investment businesses and other UK financial services need to follow. They update their extensive handbook regularly, covering everything from business conduct to guidelines on tackling financial crime.
Firms to Avoid list
You should always consult the FCA Register if you’re thinking of taking advice. If the firm you’re thinking of working with claims to be on the register, but you can’t find them – keep researching. The FCA updates their Firms to Avoid list and it’s a good place to start if you feel something isn’t quite right.
The FCA consumer helpline
If you need extra help, the FCA’s dedicated consumer helpline is available Monday to Friday from 8am to 6pm, and on Saturday from 9am to 1pm. They can help you with many things such as checking a firm’s authorisation status. You can even join the fight against scammers by reporting dodgy firms and fake FCA communications.
Extra protection for financial advice customers
When you work with a financial advisor that’s authorised by the FCA, you’re covered should anything go wrong. The Financial Ombudsman Service is a free service that can help you resolve disputes with a firm. And if you think your financial services firm has failed, the Financial Services Compensation Scheme’s free service can help you get compensation.
How we support you
We take great care to help you get the quality financial advice you need to improve your life. Every potential partner we work with is vetted to ensure the advice and guidance they offer you is regulated by the FCA.
Our friendly in-house customer service team is also here to support you. After you submit your details on our website, you’ll get a call from our team. They’re here to answer any questions you might have. They’ll also follow-up to ensure you’re happy with the advice you receive and make things right if it doesn’t meet your expectations.
Think financial advice could help you? Enter your postcode here to learn more about our service and request your free, no-obligation consultation today.