The UK Shareholders Association (UKSA) has slammed proposals in the Retail Distribution Review (RDR) saying they do not address the "significant evidence" of poor advice or issues of consumer confidence.
UKSA says the current structure allowing product salesman taking commission to be called IFAs is a “scandal of a system”.
It believes unaware consumers are vulnerable to being sold a vast range of expensive and unsuitable financial products by those not truly advisers.
The association claims the five working groups entrusted to create the RDR were dominated by industry figures.
“Representatives of the Financial Services Consumer Panel, the body statutorily charged with representing the interests of consumers, were only allowed to attend as observers,” the UKSA says.
“The ‘solutions’ of the working groups predictably consist of ideas designed to give the appearance of action while preserving the status quo.”
It also attacked the proposal to introduce the 'primary advice' tier, saying it would only overburden and confuse consumers.
“The aim should be to help individuals to understand the basic principles of personal financial management, through advice, education and self-help,” the association says.
“Only by this means can the consumer be put in a position to evaluate whether a ‘product’ meets his needs, and to submit to the selling process.”
The UKSA says if the RDR proposals are passed, the FSA will have thrown away “a great opportunity”.
“The FSA needs to be brave enough to follow its analysis through to its logical conclusion, which would give significant benefits to the UK economy through a release of misdirected resources, better allocation of capital and increased private savings,” it says.
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