The FCA pointed out to the advice sector that the FAMR report said “installment-based payments could make financial advice more affordable and accessible for some consumers, provided that the terms of the installment payments were clear and fair”.

A statement was released yesterday on the FCA website to “explain how our rules allow some flexibility to firms to allow clients to pay in installments for advice on a lump sum investment”.

FAMR recommendation 15 on payment of initial advice charges in relation to single payment products stated: “The FCA should take steps to help ensure that firms and advisers are aware of the existing flexibility in the rules on adviser charging.”

The rules require initial adviser charges for a lump sum investment to be paid upfront:
• Either as a separate amount paid direct to the adviser, or
• By deduction from the investment amount

An FCA statement read: “Some respondents to FAMR felt that the rules put in place because of the Retail Distribution Review had removed some flexibility in the way advisers can charge retail clients for advice on lump sum investments.

“The report noted that firms do not appear to be using the flexibility already permitted by the rules to offer more convenient payment options to consumers. It recommended that we draw firms’ attention to the flexibility available."

The FCA statement added: “Separately, where these limited exceptions do not apply, firms are permitted to offer a client credit to pay for an adviser charge, provided this ‘would be in the best interests’ of the retail client (COBS 6.1A.23R).

“Guidance says the firm should consider whether the personal recommendation or other related services is likely to be of value to the retail client taking into account the total charges the client is likely to be required to pay.”