AIFA has praised the FSA for pledging to be clearer on its proposals for ‘primary advice', reiterating "it must not be called advice as it muddies the water".
FSA director responsible for the RDR, Stephen Bland, yesterday said “more specific proposals” will be forthcoming on primary advice, and added “there is clearly more to do and more for us to hear…before we decide how to proceed”.
AIFA director general, Chris Cummings, says: “We’re pleased that the FSA is looking for more clarity on primary advice and the regulatory regime needed to support it.
“We see primary advice as being purely driven by the new sales regime and it must not be called advice as it muddies the water.
“We remain sceptical about the idea and are concerned that less wealthy consumers could be forced to accept an inferior service.”
Bland, speaking at the Institute of Economic Affairs (IEA) annual conference yesterday, outlined some of the responses the FSA has so far received on the Retail Distribution Review.
He said they included calls for a clear distinction between what is ‘advice’ and what is a ‘sales process’ as well as calls for more clarity on Customer Agreed Remuneration (CAR).
Cummings says: “The FSA has listened to AIFA’s call for a clear distinction between financial advice and sales. Financial advice needs to be seen as a separate profession distinct from sales.
“While sales can be conducted with integrity and honesty, it does not deliver the same benefits to consumers as full professional financial advice.
“A regulatory regime that recognises that difference will better serve consumers and will make it easier for the FSA to regulate in the future.
“The fact that FSA has shown that is listening shows that it recognises that more can be done to support the professional advice sector.”
Cummings also says AIFA agrees clients should have a clear explanation of how they pay for services.
“We firmly believe that it is all about customer choice,” he says. “Many intermediaries already operate customer agreed remuneration (CAR).
“This is distinct from factory gate pricing which is an issue for providers to resolve.”
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