Providers purchasing tables at awards ceremonies and inviting advisers to sit on them will likely not be in breach of the Financial Conduct Authority's (FCA's) requirements on inducements, it has confirmed.
Awards ceremonies are regarded as hospitality by the regulator, and firms will pass its inducements test provided the hospitality is in the UK, that it could not impair the invited adviser's ability to act in the best interest of his or her clients, and provided their attendance is not based on criteria that incentivises poor behaviours.
Clarity on the issue was sought by Clive Waller, organiser of the Aberdeen UK Platform Awards, who said he had "been concerned at some of the comments we have heard from various sources about the ability to entertain advisers at awards dinners".
The FCA issued is final guidance on inducements in January. It tackles agreements between providers and advisers, both monetary and non-monetary, which may influence distribution.
The annual Aberdeen UK Platform Awards, which are sponsored by Professional Adviser, are attended by hundreds of guests, and the ceremony includes two awards for advisers.
In correspondence seen by Professional Adviser, the FCA repeated that firms "must judge for themselves whether their specific practices are in keeping with the ‘spirit' of what the RDR [Retail Distribution Review] was seeking to achieve, i.e. to remove the potential for adviser remuneration to distort the advice consumers receive".
Provider firms should only consider providing benefits to intermediaries when it is "appropriate to the best interests of clients and not creating a flow of value to the intermediary to secure distribution", it said.
Waller said he had updated the entry criteria for the Aberdeen UK Platform Awards as a result of the clarification.
Instead of seeking to reward product excellence, the awards will place 'treating customers fairly' as the starting point in each category, he said.
"Our judges will be looking for candidates that deliver a better product, better value, a better experience, to the client. Where features benefit the intermediary, they must facilitate client benefit such as lower cost, better service or something new and innovative.
"In the case of advisers, our judges will be looking for those that employ platforms and platform-based technology to deliver a better customer proposition. In short, 'treating customers fairly' will be central to the judging process."
In the FCA's final guidance on inducements, the regulator outlined areas which may potentially influence distribution, including the arrangement of some adviser panels, training, conferences, and multi-year agreements between providers and advisers.
