Accountants are set to profit from the effects of depolarisation, which will relax the rules prevent...
Accountants are set to profit from the effects of depolarisation, which will relax the rules preventing life insurers from owning IFAs, by claiming a unique position of genuine independence when providing financial advice.
The number of life insurers buying IFA firms has sky-rocketed in the past year . For example, Norwich Union has invested in Tenet, Millfield, Inter-Alliance, IFG Group, Cavanagh Group and Berkeley Berry Birch.
Although insurers claim they do not have any influence over their IFA arms, critics argue that acquiring financial advisors is key to ensuring their products receive favourable treatment.
Larger accountancy firms which operate advisory services for clients see an opportunity in product providers owning distributors. They argue that this move will result in fewer providers of financial advice that can claim genuine independence.
Indeed, large accountancies have already welcomed the proposals for depolarisation, claiming the changes will help clarify the status of advisors to consumers and that they will stress their independence in marketing literature.
But Phil Wilcock, a spokesman for Norwich Union, defends the insurer's position. He argues that the banner of "independence" is not important; instead what is crucial is disclosure to the customer of the IFA's investment makeup.
Wilcock strongly denies that Norwich Union invests in IFAs to control product distribution. He says that Norwich Union's investments have been limited to 9.9% of IFA firms, and that there are no contractual obligations with IFAs to push the life insurer's products.
Wilcock says that decisions to invest in IFAs were based on the relatively attractive return on investment, the value chain idea of extracting margins from the distributors, and the necessity of injecting funds into and supporting ailing IFAs.
Whatever the outcome, it is the customer who eventually decides. But in the meantime any professional service operating a financial advisory arm, such as a law firm, could also join the scuffle.
FCA consultation response
MoneyLens to be edited by former Mail on Sunday journalist Vicki Owen