The UK’s Financial Services Authority has published new rules that will outlaw embedded commissions by the end of 2012.

The FSA said Friday that the new regime will remove commission bias from the sale of retail investment products, and help restore consumer confidence in this market.

“From the end of 2012, firms will have to be upfront about how much they charge for their services, and no longer hide the cost of their advice behind the cost of a product,” it said.

Additionally, firms will not be able to accept commissions in return for recommending specific products.

“If this market is to survive, and thrive in the future, people need to know their adviser is acting in their best interests, and is well qualified to carry out that role. Today’s new rules are designed to boost confidence and trust in the retail investment market by removing commission bias, actual or perceived, and exploding the myth that investment advice is free,” said Sheila Nicoll, FSA director, conduct policy.

“It is vital that consumers know not only the cost of financial advice, but also its value,” she added.

“There is a need to reconnect the adviser and client, where one pays for the services of another, and without the distraction of commission. Only then can consumers have real confidence and trust in the advice they are receiving.”

IE