Issues of provider investment in adviser firms, use of the word "independent", initial disclosure documents, technology, and the ability to do business over the telephone have been specifically tweaked by the FSA in response to earlier proposals on de-polarisation.
The regulator is extending proposals to limit investments in or credit to distributor firms by providers. Original proposals in CP 166 were to limit such investments just to cases involving so-called whole-of-market firms advising on the full range of products on the market.
Now, however, the FSAsays it wants to extend this rule to firms or businesses advising on even a limited range of products, in order to ensure all consumers can be confident there is no bias in any recommendations made.
The quid-pro-quo of this change will be the raising of the upper limit at which advisers must notify clients of a holding in their business by a provider whose products they are recommending - to 10% from the current 5%.
This affects initial disclosure documents, and brings the rules in line with the Insurance Mediation Directive.
Another IDD-related issue is terms of business disclosures. The FSA now says firms will have an option of whether to attach such disclosure to the end of an IDD, thus forming a single document.
The question of adviser independence in business situations is raised on the issue of advising employers on GPP schemes, and specifically on situations whereby IFAs might be involved in advising on the merits of joining such a scheme.
The problem is the conflict between the general view of the regulator that "only those firms or individuals that offer advice across the whole market or of a sector or the market and offer their customers the opportunity to pay by fee may hold themselves out…as 'independent'".
The FSA says it intends to draw up new draft rules, which mean IFAs do not lose their ability to describe themselves as “independent” when advising in such GPP situations, thus enabling them to continue using the same stationary, business cards, etc.
Multi-tied advisers will be allowed to "widen their range of products during the advice process" if it is found that products outside the original scope of advice are better suited to customers.
The complaints process has been modified with an amendment to the proposal for creating a single point of complaints handling regardless of whether the complaint is an issue of advice, product or administration.
As it stood, the original idea was to cut back no the need for consumers to lodge multiple claims when tracking down where responsibility lay for dealing with any particular complaint.
The amended proposal would allow for greater sharing of responsibility "for situations where firms may be jointly responsible," the FSA says.
Technology gets a big boost with the new proposal on indirect benefits including IT support. The FSA suggests providers should be able to give firms "not in the same group…cash or assistance to develop software or other computer facilities if the provider can identify equivalent cost savings to itself or its customers."
IFAs are also unleashed in terms of the business they can do by telephone.
The FSA proposes changing rules currently imposed, which require terms of business be delivered before any designated investment business can be conducted.
Instead, IFAs should be able to issue terms of business on a non face-to-face basis in the same way as an IDD, enabling a sale to be concluded over the phone before documents are sent out.
Precise rules on this will be developed as part of the FSA’s handing of the Distance Marketing Directive and Consultation Paper 196.
"The combined effect of the two sets of rules is that a firm may initiate and complete a telephone sale of a packaged product to a private customer without first sending full copies of either the IDD, the menu or the terms of business, provided that the customer has explicitly consented to this process, and has already been given relevant information over the telephone."IFAonline
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