8 Who is a distributor? The definition of ‘distributor’ is very widely drafted and is intended to encompass a wide range of scenarios. How distribution arrangements and chains operate may differ from sector to sector, for example distribution arrangements may apply differently in the investment sector from the payments sector. In the payments sector an e-money issuer may formally appoint a distributor to undertake activities on its behalf. In the investment sector, a firm may decide to ‘distribute’ (recommend) a product but there may not be a formal distribution agreement in place. In the investment sector, under the Consumer Duty, a distributor will be any firm that distributes a product or service. An adviser firm will be distributing the financial instruments, for example funds, it includes in its advice proposition or advised model portfolio service, if it provides one. A discretionary manager will be distributing its discretionary management services. It will also be distributing the financial instruments, for example funds, it includes in its discretionary management service. There may not be formal distribution agreements in place in these scenarios. Examples: Adviser firm / intermediary Manufacturer Distributor Adviser firm creating (‘manufacturing’) its own advice proposition and menu of services √ It is manufacturing its advice proposition √ It will be distributing products, for example, funds, through its advice proposition Adviser firm creating an advised model portfolio service (MPS) √ It is manufacturing an advised MPS √ It will be distributing products, for example, funds, through its advised MPS Adviser firm recommending a discretionary management solution as part of its Centralised Investment Proposition (CIP) √ The recommendation of the discretionary management solution will form part of the adviser firm’s CIP that it has ‘manufactured’ √ It will be distributing the discretionary management service
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