The FSA today says it intends to publish firms' depolarisation status to consumers due to the "strength of support" for the idea.
The move would mean for the first time consumers would have easy access to information about whether their adviser offers independent (i.e whole of market), tied, or multi-tied advice.
However, the FSA says it will first carry out cost benefit analysis of the move, pointing out some in the industry believe publishing this information would be of very limited use to – and prone to misunderstanding by – consumers.
In addition, it says it intends to examine how doing so would conflict with its plans for a discussion paper on regulatory transparency as part of the Retail Distribution Review (RDR).
The regulator reveals its intentions in a paper today outlining the fact it will “shorten and simplify” the complaints return and the retail mediation activities return (RMAR).
It says the question in the old RMAR paper ‘Do you give independent advice?’ would be replaced with a question about the firm’s depolarisation status.
The FSA says the requirement to report this data begins in September next year, confirming it will have a “complete data set” by April 2009. The earliest it would be able to publish firms’ depolarisation status is May of that year.
The option to ‘depolarise’ was first introduced by the FSA in 2004 and heralded the beginning of multi-tied advice.
At the time advisers could only offer independent or tied advice, and the regulator said the move would increase “the range of products available to consumers as well as giving them a clearer picture of what they are paying for advice”.
But firms’ depolarisation status has not been published to consumers before, and some feel it should be.
It says most of the responses it received on its consultation paper on the RMAR concerned firms’ depolarisation status.
It says those strongly in favour included the Financial Services Consumer Panel (FSCP) as well as a number of adviser firms.
However, it adds there was “relatively low confidence” consumers would “appreciate” the implications of firms’ depolarisation status if the information were available to them.
The paper reads: “Based on the strength of responses in support, we want to publish firms’ depolarisation status in the future. However, this will be subject to a full cost benefit analysis.
“On the costs side, we will need to quantify the systems changes required to make this information available (for example, changes to the FSA Register).
“Publicising the availability of the information to consumers will also be a relevant factor in calculating costs.
“Regarding the benefits to consumers, we intend to explore this more fully with the respondents supporting publication, and in particular the Financial Services Consumer Panel.”
John Howard, chair of the FSCP, says: "It is the panel's view that anything that would help consumers select a financial adviser would be useful. We include an independent data source on firms' depolarisation status in that."
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