Jackson was also clear that while an adviser may move between categories during their career, they cannot be both at the same time. Specifically she highlighted the confusion that is caused when a tied agent gives advice on another supplier’s product, either because there is an agreement between the suppliers, or the supplier to which the agent is tied does not offer a product in a specific area.

“It must be absolutely clear to customers and everyone else in the industry in what capacity an adviser is providing advice,” Jackson said. “At the moment, the same person can be a tied agent for a product supplier for one thing, and call themselves independent for other things. That becomes very difficult.”

This is not only confusing, but also blurs where the responsibility lies if something goes wrong. The FSB wants it to be clear that if an agent is tied, then the product supplier must stand behind the advice given. If however they are independent, then it is the adviser themselves or their advice firm that is ultimately responsible.

The FSB also said that, although this would not be part of phase one of RDR, it would be looking at the issue of advisers who hold category two discretionary fund management licenses and run their own white labelled unit trusts. There are concerns around the conflicts of interest this creates if advisers are putting clients into their own funds.

Da Silva noted that in phase two of the implementation of RDR, the regulator will be looking at the question of whether such funds run under a category two license should be seen as product suppliers. This would make the advisers who run them tied agents.

The FSB also intends to look at the remuneration models for investments, specifically where there are multiple levels of fees. It may also look at how category two licenses are issued, to differentiate between advisers who have a fund management mandate and true asset managers.