IFAs will not be able to adopt the FSA's proposed 'basic advice' regime because firms using this approach will not be allowed to say they are offering a "whole of market" service, warns the Association of IFAs.
The FSA is to consult on proposals to introduce a simpler and lower-cost advice regime for consumers wishing to invest in stakeholder products.
To make the advice process as simple as possible for the basic adviser, the FSA suggests the range offered should be restricted to one of each product type.
Basic advisers will therefore not be able to say they are offering ‘whole of market’ advice.
The FSA states: "A firm will not be able, when offering basic advice, to describe itself as offering ‘whole of market’ advice, even if its full advice service is offered on that basis, because the range on offer will be limited to those products it has pre-selected for the basic advice process."
IFAs have to be able to offer ‘whole of market’ advice if they want to call themselves Independent Financial Advisers, so effectively the FSA proposals mean they can not adopt the new regime if they want to keep their ‘independent’ status.
AIFA director of public affairs Tracey Mullins says the proposal means IFAs can advice clients on these products but it will have to be on a 'full' advice basis.
"If that is worthwhile or not for IFAs, that's the question," Mullins says.
The whole concept behind the proposed 'basic advice' regime is to keep the cost of advice low. If IFAs will have to offer their full advice service, they will hardly cover the costs, she says.
She adds: "Do they [the FSA] assume IFAs won’t sell these products?"
Commenting on this, an FSA spokesman says: “If you want to call yourself a basic adviser, you can’t call yourself ‘whole of market’.”IFAonline
F&C IT's 150th anniversary
First meeting for Powell
Red tape and tech driving consolidation
2019 Survey opens in June