Code tackles replacement business

A code is being finalised that will apply to everyone giving financial advice once the new regulatory regime comes into effect.

The issue of replacement business has been a fraught one in recent years as the Financial Markets Authority has cracked down on “churn”.

Angus Dale-Jones, chairman of the working group developing the new code, said replacement business was addressed by both standards four and five of the new code.

“[These] would require a person to take reasonable steps to ensure that the client understands the financial advice (including material risks and consequences of the nature and scope of the financial advice), and to give financial advice that is suitable for the client.”