Independent financial advisers will face further compliance as well as reduced incomes if the menu for comparing financial products is introduced as it currently stands, warn financial industry experts.
Latest proposals for the menu published by the FSA yesterday suggest consumers should be able to compare advice costs for different product types, distribution channels and advice payments methods.
Fidelity Investments believes the regulator's proposals sounds good in theory, but says they will be hard to put into practice.
Rob Fisher, head of IFA marketing at Fidelity Investments, says: "No one would dispute that - in theory at least - comparisons could help consumers. But they must be realistic comparisons which consumers can use. In practice we believe this concept will be unworkable.
"Overall, we fear a 'double-whammy' for the IFA community, where this leads to reduced income and a further escalation in the compliance overhead," he says.
Fidelity is also worried the uptake will not be as high as the FSA expects as there is no evidence the 81% of consumers who thought the menu was a 'good idea' would read or even understand the document. Furthermore, the flood of data does not necessary equal greater information, adds the asset manager.
Fisher concludes: "When will the FSA acknowledge that ensuring the success of a thriving IFA sector is of far greater importance than their apparent obsession with listings, league tables and industry averages?"
Somewhat less critical of the FSA's latest revelations is Norwich Union, which says it supports the concept of a menu approach.
Peter Hales, sales & marketing director at NU, says: "There are certain aspects of the proposals that concern us, particularly around the extension of the investment ruls to all intermediaries. We are also concerned with the proposed use of the same menu approach across all forms of distribution."
The Investment Management Association (IMA) says it welcomes the FSA's move but adds there is one challenge currently facing the regulator, that is, to get the message "good advice ais worth paying for" across to consumers.IFAonline
Cash balance surges
Three reasons regulator may drop by
Replacing outgoing Phil Loney
162,000 DB transfers taken place