Do not update your Funcom account to a Steam account. You will lose your characters.

[bvkroll]

If you go to the Funcom website by clicking the account button in game, they give you the option of linking your Funcom account to your Steam account.
If you're like me you'll soon be looking for a new game to play because all of your stuff will be lost and unrecoverable if you link them. That is what they told me when I contacted their customer support.

[☠ Asasin ☠]

Yes but also no.

If you download and launch the game through Steam BEFORE you link your FC account to your Steam account, then Steam creates a second account. As soon as you link your FC account to Steam, that second account gets overwritten. Obviously this isn't a big deal if you just downloaded the game - you'll lose your character and a minimal amount of time played, BUT your FC account still remains entirely intact and if you played any of that at all through the independent launcher, then that progress is transferred over.

If you've been playing through Steam for a while, then yes, it makes zero sense to link your FC account to your Steam account as that will override any progress and purchases you made on Steam (in which case it is highly advised that you just keep the accounts separate).

I just wanted to clarify that, because some people may be under the impression that all progress on both accounts is deleted in the case of a merger, but in reality it's the Steam-created secondary account that is deleted.

AT ANY RATE... It's something Funcom should really look into fixing / changing, because it is screwing people over.