THE FINANCIAL Services Authority will be issuing a stern warning to insurance companies, fund management and banking groups, saying any payments they make to financial advisers must be "clear, open and transparent".
The Scotsman reports the FSA will go ahead with the warning after it raised concerns financial service firms might be tempted into using hidden incentives to persuade IFAs into placing their clients’ money with their company.
FSA chief executive John Tiner told the Treasury Select Committee the regulator had become aware in the run-up to depolarisation some financial advisors were seeking "golden hellos" from life insurers.
As well as warning providers, the FSA has also written to IFAs, telling them that such behaviour is unacceptable.
MEANWHILE, ONE of Britain's biggest mortgage lenders yesterday announced the latest rise in interest rates had forced it to tighten its lending rules, says the Daily Telegraph.
According to banking group HBOS, its move came after the Bank of England decided to raise rates by another 0.25% in the beginning of June - the second increase in a row.
HBOS made the announcement as BoE's governor Mervyn King told the Treasury Select Committee he did not regret the warning he had issued last week, suggesting house prices may drop.
He said: "I reflected very carefully. What I said is what I wanted to say.
"It would be unfortunate if people were encouraged to make decisions on a very risky assumption that house prices could only go ever upwards."
According to the Scotsman, King also told the Committee the Bank had not abandoned its "gradualist" approach to raising interest rates, despite two consecutive hikes in the last months.
MP John McFall asked the governor to explain whether the Bank’s second raise indicated it had shifted to a more aggressive strategy to cool down consumer borrowing.
King replied: "No, chairman, I don’t think we have.
"One of the considerations that led us not to raise interest rates by 50 basis points in May was the concern that the market and others might indeed conclude that we had changed our strategy."IFAonline
'Necessary steps' taken
Penalty payments and enforcement policy
Fees as low as 0.04%
Client procurement costs ‘unsustainable’
Only 9,486 applied for the benefit in 12 months