Why You Should Always Use An FCA-Regulated Financial Adviser.

Why You Should Always Use An FCA-Regulated Financial Adviser.

Whenever you’re looking to invest money, it’s essential to get good advice. That’s because small mistakes today can balloon into massive opportunity costs ten, twenty and thirty years from now. 

However, not everyone offering so-called “financial advice” is in a position to give it. And that is putting consumers at risk. Fortunately, the Financial Conduct Authority (FCA) is helping. It regulates who can sell financial advice services and defines the rules they must follow, providing consumers with a degree of protection. 

Why Does Using An FCA-Regulated Adviser Matter? 

Financial advisers are paid professionals who are allowed to tell you what you should do with your capital. Usually, they tailor their recommendations to your financial situation and investment goals using metrics like age and risk tolerance. However, unless they have the right training, experience and qualifications, they might not do a good job. And that’s why it’s critical that any advice you seek comes from an adviser with the proper regulatory approval. It goes some way toward protecting you against bad advice. 

They’re Liable

According to the FCA, advisers are “responsible and liable” for the quality, accuracy and sustainability of the recommendations that they make. So, for instance, if they give you bad advice that results in you losing a considerable proportion of your portfolio, you may have recourse via the FCA.

Suppose, for instance, you have a legal claim against your financial adviser due to advice quality. Usually, clients first contact the adviser themselves, giving them a chance to explain their lack of advice appropriateness (i.e. if the legislative change has rendered the initial advice now irrelevant to your desired outcome). However, if they fail to address your complaint in the first eight weeks, you can then refer your case to the Financial Ombudsman Service – a free and independent agency that has the power to award you with compensation. They can provide “redress”, even if the advising firm goes bankrupt, providing you with additional protection. 

An FCA-Regulated Adviser MUST Treat You Fairly

Without the FCA, there would be nothing stopping financial advisers from recommending that you put all their assets into their friend’s mutual collective or highly risky investment funds. Sure – those funds could be well-managed. But there would be a clear conflict of interest that would prevent you from getting the best possible advice. 

FCA rules, however, attempt to reduce this. In the UK, financial advisers do not have a fiduciary responsibility towards their clients, meaning that they do not have to act in their financial interest at all times. However, the FCA demands that advisers give “fair” advice to their clients. For instance, advisers must “pay due regard to the interests of the customer.” They must also ensure that they “manage conflicts of interest fairly,” between both itself and its clients – and between clients themselves. These protections are not available from unregulated advisers. 

They’re Qualified Practitioners

The FCA also demands that anyone giving financial advice must have qualifications relevant to their post at Level 4 or higher in the national Qualifications and Credit Framework. Essentially, this means that financial advisers must have university degree-level qualifications in order to give you advice on how you should allocate your funds. 

Usually, financial advisers will post their qualification on their LinkedIn account, company bio, and plaques at their physical premises. If you can’t find them, just ask for proof of their credentials when you meet them in person. 

You Get Peace Of Mind

Lastly, choosing an FCA-regular financial adviser gives you peace of mind. If you receive unregulated advice, you leave yourself open to getting bad advice. Furthermore, you might have to pay high commissions and be unable to exit from losing investment strategies early, preventing you from cutting your losses. Without FCA protection, you may not have any recourse and you could lose all of your money. 

Please note, however, that financial advisers are not oracles, nor do they have the ability to predict the future. They can’t tell you which stocks will definitely make money over the next five years, or which to avoid. That all comes down to their personal insights. As with any form of investment, your capital is always at risk.

Good advice, therefore, doesn’t tell you specifically what to buy or sell. Instead, it informs you of the rules of the game and how you should allocate your capital accordingly. It also introduces you to investing probabilities, showing you how risk and return relate to each other, and how you might want to mix and diversify your assets given your situation. 

If an investment adviser guarantees you’ll make money, walk away. In economics, there’s no such thing as a free lunch.


BulbFin is a free service which connects UK consumers with FCA-regulated advisers. Our advisers are all vetted based on the quality of their advice and qualifications to ensure BulbFin customers benefit from expert financial insight whenever they need it.

Whether you need help with your mortgage, pension, investments, estate planning or anything related to personal finance, you can use BulbFin to find an FCA-regulated adviser with the answer to your questions.

Feel free to get in touch with BulbFin today to review or attain a suitable life insurance policy.

Risk Warning
Any investment carries a degree of risk and your investments may decrease in value or fail. The levels and bases of taxation and reliefs can change at any time and are dependent on individual circumstances.