The Association of IFAs (AIFA) is calling for the re-establishment of the 'Law of Agency' to help clarify the distinction between 'sales' and 'advice'.
In a policy paper on the Retail Distribution Review (RDR), AIFA director general Chris Cummings says those firms willing to adopt the principle of being an 'agent of the client' should be given distinct status by the FSA and rewarded by "appropriate" regulatory dividends.
He adds introducing the law across financial services would help restore consumer trust in financial advice by "showing the clear legal obligations of all parties".
"We believe an IFA is the only true agent of the client," Cummings says. "Only an IFA can give true advice as they are legally bound to put the best interests of the client first, and avoid all conflicts of interests.
"Sales representatives, on the other hand, are the agents of the product provider and their job is essentially to sell the products of the provider which they represent."
Cummings says it is important the disclosure regime allows consumers to "comprehensively judge" the value of the services offered.
"In addition we are calling for FSA to review its financial promotions regime to help consumers understand firm's offerings before they enter into any dialogue," he says.
The policy paper can be viewed here.IFAonline
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