The true cost of bad advice, and more importantly what it’s going to cost, moved into the spotlight this week with the FCA’s headline-making proposals to compel most financial advice firms, some 5,000, to set aside reserves for the cost of bad advice.

Proposals from the FCA would require investment advisers to set aside a minimum of 28% of potential liabilities in advance to compensate investors if bad advice is given.

The FCA’s plans to make investment advisers set aside funds in advance to compensate investors if bad advice is given have been cautiously welcomed by Financial Planners.

BSPS-linked advice firm DC Financial Limited (FRN: 170299) has been declared as failed by the Financial Services Compensation Scheme.