A person or firm that will provide advice about investments,
life assurance, pensions and other monetary that involve buying or selling financial
products is referred to as a financial adviser. Such persons
or firms are regulated by the Financial Services Authority (FSA),
formally the Personal Investment Authority (PIA)
and now subject to the terms of the Financial Services and Markets
Act 2000 (FSMA).
Under this Act polarisation rules stipulate two types of adviser: those that sell the products
of a single company are either a company representative or a
tied agent and those who base their advice on all the products
available on the market are called independent
financial advisers (IFA).
There are 77,000 registered individuals of which 26,000 are
IFAs, 10,000 are IFAs formally registered with professional
bodies such as solicitors and accountants and 41,000 operate
as direct sales forces or tied agents.
The above is different for a pensions consultant or actuary
where information or projections are provided for retirement
planning and where there are no regulated products involved.
It is usual for a pensions consultant to be qualified with G60 Pensions and an actuary to be a member
of the Institute of Actuaries.
The Family Proceedings (Amendment No. 2) Rules 1999 make important
changes to the Family Proceedings Rules 1991, as shown in step-by-step
guide effective from 5 June 2000. These new rules
mean that procedures for a couple on divorce or judicial separation or nullity of marriage making an application for ancillary
relief should have fewer delays for settlement, lower costs
and allow the court greater control over the conduct and proceedings.
The procedure involves three stages, the first
appointment, financial dispute resolution (FDR) appointment
and if there is still no agreement, the final
hearing. At any stage during this process either of the
parties can make written offers to settle part or all of the
matrimonial assets. Before making or replying to such offers, professional
advice from a solicitor should be sought by the parties.
No later than 7 days before the FDR appointment the applicant
for the financial order must file at the court details of all
offers made to or received from the other party.
Rule 2.61E of the Family Proceedings Rules states that the FDR
appointment will allow the parties to discuss and negotiate
a final settlement of the matrimonial
assets. This meeting should reduce the conflict around disputes
over assets as each party must be open and without reserve in
order to reach a settlement. As such, any evidence said or admitted
during financial dispute resolution is not admissible as evidence
at a future date.
The courts will expect the parties to make offers and the recipients
to give them due consideration. It may be at the FDR appointment
that such matters regarding the valuations of complex pension arrangements come to the attention of the
judge at which point if there is no agreement between the parties
as to the pensions
expert to be appointed, the court will use its powers under
part 35 of the Civil Procedure Rules 1998 instructing that evidence
be given by one expert only.
With the introduction of the Financial Services and Markets
Act 2000 (FSMA) from midnight on the 30 November 2001, the Financial
Ombudsman Service (FOS) replaces the existing ombudsman and
legally become the statutory ombudsman scheme covering most
areas of personal finance. The FOS will aim to satisfy the Financial
Services Authority (FSA) objective to maintain market confidence
by providing a dispute resolution procedure. The Pensions
Ombudsman will however continue as a separate scheme.
Services Act 1986
Parliament introduced a scheme of regulation for investment
business as the Financial Services Act 1986 which came into
effect from April 1988.
At that time the Securities
and Investment Board (SIB) was responsible for this regime
and required that all investment businesses apply for authorisation
through their respective self regulatory organisations (SRO),
by a recognised professional body (RPB)
or be exempt from investment activity, otherwise it is a criminal
offence to provide investment advice without authorisation or
exemption with the maximum penalty of two years prison sentence,
a fine or both. To be authorised, a member must meet certain
requirements as specified by their regulator such as capital
adequacy and training.
In October 1997 all functions of SIB were transferred to the
Financial Services Authority (FSA). The Financial Services Act
1986 had a significant effect on intermediaries where polarisation
rules differentiated between tied agents or company representatives
selling the products of only one company and independent financial
advisers providing unbiased advice. Other rules deal with best
advice, product disclosure, advertising, commissions, cold calling,
customer agreements, product bias, inducements, churning and
complaints. From N2 this Act was integrated and updated by the
Financial Services and Markets Act 2000 (FSMA).
The Financial Services Authority (FSA) is the regulator for
the financial services industry. The FSA was brought into full
force at N2,
which was at midnight on 30 November 2001. Under the Financial
Services and Markets Act 2000 (FSMA)
the FSA has four objectives:
understanding of the financial system;
With the introduction of the FSMA at N2, the FSA regulates the
activities of mainstream financial services business. The FSA
also have a duty to maintain an oversight of and keep under
review how exempt
professional firms carry on regulated activities and how
the designated professional bodies (DPB)