Financial advisers fear the Financial Markets Conduct Bill will kill their ability to market directly to prospective customers by banning unsolicited meetings.
The Institute of Finance Advisers has pleaded with the commerce select committee to change clause 71 of the proposed legislation, which prohibits the offer of financial products resulting from an unsought meeting with an adviser.
Clients do not in general contact an adviser, the IFA says. As its now proposed, no adviser would be able to approach any prospective client because it will almost certainly result in a sale further down the line.
That could make it "impossible for an adviser to gain new clients."
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IFA chief executive Peter Lee says the association's submission reflects "considerable industry disquiet", especially as financial advisers are already subject to fresh law and regulation under the recently passed Financial Advisers Act.
As the clause is written, it doesn't matter how many meetings you have," said Lee. "If the first one was unsolicited then you can't offer products."
The IFA also queried in its submission why quoted securities were exempted. Why should an adviser offering shares be exempted, when the same adviser offering the same shares via a managed fund would be caught?