A thematic review published today by the Financial Conduct Authority shows that most advisory firms describing their service as 'independent' appeared to use the description accurately.
The FCA is also clarifying certain issues to provide further support for those firms that remain unsure what standards they must meet to be able to call themselves 'independent'.
This was one of the central elements of the Retail Distribution Review, which came into force in 2013.
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It aimed to ensure that financial advisers operate as either 'restricted', where they are only able to recommend certain products and providers; or 'independent', for which they have to objectively consider all types of retail investment products to meet the investment needs of a retail client.
Nick Poyntz-Wright, director of long-term savings and pensions at the Financial Conduct Authority, said: "Most firms are using the 'independent' tag correctly, which is important in helping consumers understand what service they are buying.
"But, for those firms who remain unsure, we are providing further help so that they can better understand the standards they need to meet."
In response to calls from the industry for further clarification on the standards required for advice to be 'independent', the FCA has published examples of good and poor practice within its review.
The FCA is today releasing a video on the issue of independence for financial advisers introduced by Clinton Askew, a financial adviser who sits on the FCA's Smaller Business Practitioner Panel, addressing:
- providing advice on all retail investment products in a relevant market;
- referrals to other advisers;
- the use of product panels;
- the use of platforms;
- the use of model portfolios, which are a collection of funds with a certain asset allocation typically designed to meet a specific risk profile; and
- referrals to discretionary investment services.
This latest RDR-focused review from the FCA is part of the second of three cycles of thematic work, looking at how firms disclose their advisory services to their customers and whether firms that are describing themselves as 'independent' are acting independently in practice.

In April, the FCA will be releasing the remaining part of the second cycle of research, which looks at how cost and services are disclosed by advisers.