MPs are backing IFA calls to maintain much of the polarisation regime and advice delivery for fear t...
MPs are backing IFA calls to maintain much of the polarisation regime and advice delivery for fear that reform would lead to less competition in the products offered.
A letter is being sent to Howard Davies, chairman of the Financial Services Authority, by a parliamentary committee recommending proposals for polarisation reform be "modified", as it is thought current plans could "decimate the IFA sector and lead to less competition in financial services generally".
Speaking at a parliamentary meeting of the All Party Group on Insurance and Financial Services and the Association of Independent Financial Advisers (AIFA) last week, chairman of the Group, John Greenway MP, expressed considerable concern that the proposals contained in CP121, as explained by the AIFA, will harm consumer interests in independent advice.
"The All Party Group is especially concerned at the prediction that the FSA's proposals could decimate the IFA sector and lead to less competition in financial services generally," said Greenway.
"Whilst we recognise that there is a case for allowing banks and other financial institutions the ability to offer a wider choice of product than at present, this must not be done at the expense of the independent sector which cannot be in the consumer interest.
"I shall be writing on behalf of the Group to Howard Davies urging that the proposals be modified and it was extremely helpful to have AIFA's views on how this can be done in a way which still allows the Government to achieve it's objectives," added Greenway.
Comments expressed by the Group follow suggestions by Paul Smee, director general of the AIFA, the FSA is trying to define independence by looking only at cost implications of advice delivery.
"The proposals focus too much on redefining what constitutes independent advice and, by taking the one-dimensional view that this is all to do with remuneration, they threaten to cut the number of independent financial advisers by up to 90%. This will damage a source of competition in the market," said Smee.
"Independence is clearly not just about cost. It is also about delivering advice free from contractual ties to providers and giving consumers access to the whole market," he added.
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