It is vital consumers are consulted to ensure they understand the "industry terminology" in the regulator's Retail Distribution review, according to the Chartered Insurance Institute.
Sandy Scott, director general of the CII, says: “Most of the terminology [in the RDR] is industry terminology.
"These terms need to be tested with consumers to make sure they can get their heads around them.”
The FSA has proposed creating a tiered system of financial advice, which will consist of two levels of advisers providing ‘full-advice’.
General financial advisers would not be as qualified as professional financial planners would, but they might have a greater range of remuneration practices, such as a commission structure.
The issue has caused frustration among IFAs, who fear they may no longer be able to call themselves financial advisers if they do not have the qualifications required, even though they may have many years of experience.
Scott stresses, given the timescale of the RDR, there will be plenty of time for the industry to adjust and for advisers to gain the correct qualifications.
"There is no need to panic because the process will take a long time," he says.
"We currently have around 1,000 chartered financial planners and will have over 5,000 well before any regulations come into effect.”
Scott’s call to focus on consumer understanding of industry definitions comes as a separate report revealed one in three consumers thought the definition of independent meant an adviser who chooses products from the whole market, rather than the fee-based definition proposed in the RDR.
If you would like to comment on this story, contact:
Tel: 020 7034 2682
e-mail: [email protected]
Caring for children and elderly relatives
Similar to June 2007
Square Mile’s series of informal interviews
Fine reduced to £60,000
Two roles created