A survey suggesting consumers are better off with IFAs than tied advisers raises "serious questions" about proposals at the heart of the Retail Distribution Review (RDR), AIFA says.
The Which? study, published this week, found over half of independent advisers passed its tests compared with only a third of those advisers tied to banks and building societies.
But Chris Cummings says reforms put forward in the RDR could see an end to independent advice for everybody.
“The key message from this [Which?] report is simple: to get the best advice, avoid the high street, shop around, and stick with advisers who are independent.
“[It] shows there is still work to be done to raise standards across the industry. However, Which? sets an exceptionally high benchmark for advisers and it is good to see an overall improvement on last year’s figures.
“The findings however, raise serious questions about the proposed reforms of the market by the Financial Services Authority, which could see independent financial advice become the preserve of the wealthy.
“Under its proposals many consumers in the middle and lower income brackets could be left with a little option but to use tied advisers.”
IFAs are better at giving advice than those tied to a bank or building society, Which? research suggests.
Which? researchers visited 21 IFAs and 19 advisers tied to various banks and building societies, including HSBC, Nationwide and Abbey, and asked for advice on how to invest £30,000.
The research found half of all advisers didn’t recommend paying off debts before investing, while 14 advisers tested failed to gather information about the clients needs to the expected standard.
More than a quarter failed to establish a correct attitude towards risk, according to Which?
Of the 19 tied advisers,13 made misleading statements about cost, while seven made misleading statements about the providers they could recommend.
However, Which? says the pass rate has improved since its last survey in 2006, when 34% of IFAs and 16% of tied advisers passed all benchmarks.
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‘Important to have an anchor’
Report to be written by TPR
Lack of innovation for solutions
Some 2,000 consumers affected