MoneyTalk July 2005

by Arch Financial Planning Limited

WHAT'S ON THE MENU?

New rules have been introduced from 1st June 2005 concerning the way in which clients are informed of the costs involved in receiving advice on buying certain financial products. These rules only affect what the Financial Services Authority (which regulates the financial services market) considers to be 'Packaged Investment Products' so they will not apply when, for example, you open a new deposit account at your bank or building society; those charges (ie the difference between the rate you receive on your savings and the rate the bank charges on its mortgages) will remain a mystery.

The new rules require financial advisers, such as our company, to give you two new forms prior to providing you with any advice. These forms are important and both carry a ‘Key Facts’ logo.

The first form is the Initial Disclosure Document, headed ‘Key Facts about our services’. The purpose of this is to give you some important information about the firm you are dealing with. Firstly, the firm may have some restrictions on the products which it can advise on. Either, like this company, it will be able to advise you on all products available on the market or, due to commercial arrangements it has entered into, it will be restricted to advising on the products of only a few insurance companies or investment houses. In fact, it may only deal with one such provider.

The Initial Disclosure Document will also tell you whether any product provider owns a substantial proportion of the firm or has lent it money on beneficial terms. This document is designed to ensure that you are aware of any consideration, other than the criteria which your adviser and you agree are important to you, which may influence the selection of products recommended to you.

The second document, which you may have seen referred to in the press as the ‘Menu’ – headed ‘Key Facts about the cost of our services’ - tells you about the way in which you will pay for the advice given to you. Broadly, the options will be to pay a fee to the adviser, or to allow the adviser to receive commission from the product provider, which is paid for by the charges applied to any product which you buy.

Of course, it is not as simple as that; most firms will offer both options and even where a fee is the only option this can be paid by offsetting any commissions which would otherwise be payable. Some firms may charge a fee purely for providing advice, while charging a commission for arranging the product itself.

The Menu is also designed to help you compare costs between the maximum amount of commission which the adviser will take and the average commission which would be taken across the whole market. It should be emphasised that this is only a guide. Firms do not necessarily charge their maximum rate of commission; they will vary this charge according to the complexity of each case and the amount of work they anticipate being involved. The market average is also only a guide since it is compiled by the Financial Services Authority from records which include commission taken by, for example, firms which only sell products to clients without undertaking any of the fact-finding or advice processes.

Provided that this document is taken for what it is – a ‘guide’ – it should result in more clarity for clients as to exactly what they can expect to receive from their adviser and at what cost.

If you would like to see actual copies of our Key Facts documents, please visit our website www.arch-fp.co.uk/terms_of_business.htm.

If you would like to discuss any aspect of your personal financial planning and you have an Arch adviser then please contact him or her, otherwise email direct@arch-fp.co.uk or telephone 01483 204600.

All views and information expressed within this email are generic and should not be taken as any form of recommendation or advice specific to you. We strongly advise that you take professional advice before making any decisions based on this email. The information is based on our understanding of current Financial Services Authority rules and practices which are always subject to change.

Unsubscribe: Click here if you no longer wish to receive issues of MoneyTalk from Arch Financial Planning Limited

Subscribe: If you have a colleague who would like to receive MoneyTalk please ask them to email us at subscribe@arch-fp.co.uk

Feedback: We hope you continue to benefit from this Arch service. Do please let us have your comments or feedback at anytime

Arch Financial Planning Limited

Head Office & Registered Office: Caswall House, 6 Wharf Street, Godalming, Surrey GU7 1NN
Tel: 01483 527278, Fax: 01483 527279

Administration Office: Arch House, Collins Court, 39 High Street, Cranleigh, Surrey GU6 8AS
Tel: 01483 204600, Fax: 01483 204611

AUTHORISED AND REGULATED BY THE FINANCIAL SERVICES AUTHORITY

DISCLAIMER
This message is confidential and for use by the addressee only. If you are not the intended recipient, you must not use, disclose, distribute, copy, print or rely on this message. Please notify the sender by return email and then delete the message from your computer. Arch Financial Planning Limited disclaims all liability of whatever kind (including for negligence) to anyone other than the intended recipient(s). Arch Financial Planning Limited accepts no responsibility for changes made to this message after it was sent nor for any loss or damage from receipt or use. We have endeavoured to ensure that this email is virus free but we advise that in keeping with good computing practice, the recipient should make his or her own checks.