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DPB (Investment Business) Essentials 2016

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This page has been archived because it is no longer current information but is still relevant, or it is current but over 12 months old
  • Publish date: 28 June 2016
  • Archived on: 28 June 2017

As the pensions and investment market becomes ever more complex, the latest guide from the Professional Standards team looks at where you can offer support to your clients.

"Tomorrow’s Practice" identified personal financial planning as an area in which chartered accountants can use their skills and experience to offer a range of services beyond the traditional business arena. As trusted advisors, clients may often come to you with questions on issues such as estate planning, insurance and pensions and investments. In order to answer these questions fully while staying within your regulated area of work, firms may consider applying for a Designated Professional Body (DPB) licence.

The DPB (Investment Business) scheme gives accountancy firms the opportunity to provide complementary advice to their clients on certain financial services matters. We refer to these as exempt regulated activities (ERAs). This enables firms to provide an enhanced service to clients who are looking for financial advice on pensions and inheritance tax in an increasingly complex market.

With a DPB licence your firm will be able to:

  • arrange the implementation of investment advice from a financial adviser on behalf of a client;
  • offer insurance mediation activities (such as selling tax fee protection insurance to clients);
  • undertake corporate finance activity that involves a non-controlling shareholding; and
  • negotiate with insurance companies on behalf of clients who want to make a claim.

A DPB licence will also allow your firm to:

  • explain and evaluate the advice your clients receives from a financial adviser;
  • identify unsuitable advice from a financial adviser; and
  • endorse the advice your clients receive from a financial adviser.

DPB (Investment Business) Essentials 2016

Our latest publication, DPB (Investment Business) Essentials 2016, is your guide to the additional services your firm can offer with a DPB licence. We explain more about our DPB monitoring including the details of key points arising from reviews.

One of the most common ERAs is a regulated referral to a financial adviser. This is when a firm provides the adviser with the client’s contact details and the client wants advice on pensions or other long-term contracts of insurance.

When a commission or referral fee arises from a regulated activity, firms need to ensure their procedures to disclose the commission or referral fee include the following.

  • Inform the client they have the right to require the firm to give them the commission or referral fee.
  • Obtain written consent from the client for the firm to retain the commission or referral fee on a case-by-case basis (a clause in the engagement letter is not enough).
  • Maintain evidence that the client is aware of the amount and frequency of the commission or referral fee.

These rules exceed FCA requirements for their authorised firms. This means DPB licensed firms can’t rely on disclosures made by the adviser and the firm needs to have its own procedures in place.

Other issues covered in the guide include incidental and complementary services, compliance reviews and identification of exempt regulated activities.

For more information on the DPB (Investment Business) scheme visit icaew.com/dpb.

For a quick guide to regulation why not order a copy of our Traffic light guide.

July 2016