Chris Smallwood, the chief executive of Openwork-owned national IFA 2plan, has called on the regulator to crack down on what he said were 'misleading' terms used by some restricted advice firms to describe their services.
Consumers could suffer unless the Financial Conduct Authority (FCA) fails to ban terms such as 'restricted universal' or 'restricted whole of market', Smallwood said.
The FCA has previously suggested firms should be careful which terms they use. "We do not have a 'whole of market restricted' for consumers," FCA technical specialist Rory Percival said in November last year. "We have independent or restricted."
The Retail Distribution Review outlined a new definition of independent advice and brought advisers previously operating in the old 'tied' or 'multi-tied' space under a 'restricted' advice label.
However, in January, the FCA said some firms were still confused about the requirements governing independent and restricted models.
Abuse
Smallwood said the FCA should act swiftly to stop what he sees as an abuse of the 'independent' label.
"The two terms - ‘independent' and ‘restricted' - demonstrate a clear distinction between independent advisers that can offer the full range of financial products and providers available, and restricted advisers that focus on a limited selection of products and/or providers," he said.
"There is no middle ground, and the FCA must show itself to be strong by cracking down on those restricted firms that are clouding the waters by using terms not approved by the regulator to suggest that they offer both restrictive and independent advice.
"If it has the interests of the consumer and the reputation of the financial advice industry, then it must move swiftly to issue an outright ban on misleading terms."
Smallwood's remarks echo those previously made by the Institute of Financial Planning and wealth manager Mazars.
2plan was acquired by restricted network Openwork in July 2011.
Last year, business consultant and financial adviser Phil Billingham launched an 'independence audit' to help firms understand where they stood.
