Wealth adviser Towry has said the new commission-free financial advice regime is not being enforced – enabling many companies to flout the regulations.
Andrew Fisher, chief executive of acquisitive Towry which has just snapped up another Scottish advisory firm, said: "If you are giving someone advice and if you only get paid if you are selling product, you are selling product. I don't think the FSA has grasped that."
Towry charges a £225 hourly fee for its advice, but the Financial Services Authority, which was succeeded on Monday by the Financial Conduct Authority, requires only that the adviser is paid an agreed fee by the client, and not paid by the provider.
Mr Fisher said that some firms were effectively "changing the word" from commission to fee.
He said: "It is a great piece of regulation, it just needs to be enforced."
Towry's own reliance on the continuing payment of "legacy" commissions to its acquired firms has sparked controversy, and last year it lost a bruising court case against former advisers following the defection of 400 clients.
The group arrived in Scotland in 2004 when as fee-based John Scott & Partners it bought commission-based Aitchison & Colegrave, and it has just snapped up Norscot Financial Services in Glasgow.
It yesterday reported a 20% rise in net earnings to £23.5 mil-lion and a 6.5% rise in discretionary assets under management to £4.8 billion.
Mr Fisher said the £35m raised at the end of 2012 from new investors for acquisitions meant it had dropped a plan to float the company.
He said: "Our business has grown significantly over the last few years and we will achieve further growth in 2013 through acquisition and the recruitment of individual advisers."
Mr Fisher said more than 60% of the group's wealth advisers and nearly 40% of wealth planners had gained "chartered financial planner" status by the end of 2012.
John Redpath, who is based at Towry in Edinburgh, said: "Fees are still being paid out of investments in a lot of other places."
He said although Towry, like other big firms now offered "restricted" not fully independent advice, that was because the definition had changed and Towry chose not to recommend certain types of product.
Mr Redpath added that Towry, contrary to some allegations in industry blogs, did not incentivise its advisers to move clients into its own in-house funds.
"Advisers all receive good levels of salary and don't receive bonus," he said.
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