E-commerce still faces numerous hurdles before it becomes an acceptable platform for seeking advice ...
E-commerce still faces numerous hurdles before it becomes an acceptable platform for seeking advice and trading, according to the FSA.
The regulator recently commissioned London Economics to report on polarisation and financial services intermediary regulation. This included a study on the future of advice in the UK and the potential impact of technology on the industry.
The report analysed the impact of electronic signatures, polarisation and the role of online advice within the financial services industry.
London Economics noted internet technologies are excellent at providing information but have so far proved quite limited in providing advice, often leaving users requiring further advice. The limitations of the internet as an advised channel are illustrated by the fact that technology is only used to deliver about 4% of advice, according to the report, while the most widely used mechanisms remain face-to-face and telephony, which accounts for 44%.
The future of online advice may veer towards digital TV and other broadband technologies in the pipeline, which will enable two-way video communication, making online advice a much closer substitute for face-to-face communication.
Online IFA, Sort, was singled out in the report in drawing a distinction between regulated financial advice and the information based services offered by many others.
Ben Goss, Sort's commercial director said consumers were increasingly turning to the internet for help with their financial decisions.
He said: "Traditional advisers will find it increasingly uneconomic to service customer needs for regulated advice as commissions are reduced through developments such as Cat standards, fund supermarkets and stakeholder pensions."
Sort is one of the first independent companies to offer both corporate and individual advice via the internet.
The service does not sell products or charge commission and uses a charging structure offering a fixed initial price which can be up to 85% less than normal commissions.
Customers complete an initial consultation over the internet and are then offered a 'financial decisions kit' which outlines the individual's situation and a list of the most suitable products by e-mail.
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