It was bad news last week for financial advisers, as FCA regulated wealth manager, St. James’s Place, cancelled Mediterranean Cruises for advisors who met sales targets.

While this might have been a surprise for their advisors, the move is very much in line with rules imposed by the FCA Bible – the “FCA Handbook”.

The FCA Handbook contains a myriad of rules protecting customers. It specifically requires that sales teams are not remunerated with incentives that conflict with their duty to act in the best interests of a client, and particularly not to recommend a particular product when another product could better meet the client’s needs.

Under stiffer regulation, the financial services industry has for some time been firmly moving away from allowing employees to accept incentives, gifts and entertainment. The recent “MIFiD II” EU directive banned the provision of free financial research and analysis by brokers to investment managers, which is very much in line with the regulators desire to focus on customer outcomes and fee transparency.

It would be interesting to see the St James’s Place Compliance Manual to see how the risk and compliance teams deal with these incentives. After all, it is hardly likely that a member of the sales team will tell a customer that he just needs to sell them a home equity plan so that he can take his family on the Queen Mary!

Even though it means a few disappointed families who were set for a holiday, this is ultimately a positive step. We need financial advisors to act in the interest of their clients, not in the interest of their next vacation.