The Financial Services Authority is attempting to achieve too much in one go through the depolarisation menu, suggests life insurer Friends Provident.
Although the Menu is an improvement on the Defined Payment Scheme (DPS), argues Friends Provident, the document is unlikely to meet the expectations of the FSA as attempts to boost consumer ‘shopping’ are "unreasonably high", says Graham Harvey, director of marketing at Friends Provident.
“Using the Menu as a tool to help address product and provider bias is a sensible approach. However, the Menu has limitations and its ability to get consumers to ‘shop around’ is one of them.
“We need to try and focus our efforts on improving consumer confidence in the industry and in getting consumers shopping. The Menu has a job to do, but acting as a proxy for shopping around should be outside the job description,” adds Harvey.
More importantly, Friends Provident argues the 18 months taken by the FSA to develop the average and highest “market rate comparator” commission rates proposals is a fair reflection of the regulatory body’s own uncertainty about its plans for a commission menu.
Consumers are also unlikely to respond to the menu, suggests Friends Provident, as the level of complexity shown on the menu is likely to deter them from gaining best value from products.
“Shopping around for a better deal should therefore be at the ‘product level’ and not the ‘advice level’, and these objectives are already being met by the Government’s other initiatives, including the charge cap,” suggests Friends Provident.IFAonline
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