CIPR 5.3.4 Investment advice for retail customers — independence

(1) This rule applies if an authorised firm is providing investment advice to a retail customer in relation to packaged investment products.
(2) The firm must not hold itself out as acting independently unless:
(a) it is not party to any arrangements with particular product providers that prevent it from giving advice on packaged investment products from the whole market (or the whole of the relevant sector of the market);
(b) it gives the advice on packaged investment products from a sufficiently large range of types of products and product providers to enable it to give the advice on the basis of a fair analysis of the market; and
(c) it offers retail customers the opportunity of paying in full for its services by means of a fee.

Guidance

Rule 5.3.4 (2) (c) means that an authorised firm that wishes to hold itself out as independent will need to give retail customers a purely fee-based option for paying for its services. The fee may be offered on a contingent basis so that it does not become payable if the retail customer does not buy a product. An authorised firm offering a fee-based service may, in addition, provide the retail customer with other payment options, for example, by commission.
(3) If an authorised firm is providing investment advice to a retail customer in relation to a packaged investment product provided by another person:
(a) the firm must not hold itself out as the provider of the product; and
(b) the firm must not do or say anything that might reasonably lead the customer to be mistaken about the identity of the product provider (and, if the customer is apparently mistaken about the identity of the provider, the firm must correct the mistake).
Derived from QFCRA RM/2019-2 (as from 1st January 2020).