The FSA wants firms to tell the regulator exactly what kind of advice they give to customers.
As we reported yesterday, the FSA plans to cut the information volumes in its Complaints Return and Retail Mediation Activities Return by around 80% and 30% respectively.
One of its proposals is to replace the ‘Do you give independent advice?’ question, with five descriptive options for firms to choose:
- Independent (whole of market plus option of fee-only)
- Whole of market (without fee-only option)
- On the basis of a fair analysis of the market
- Multi-tie/ the products of a limited number of providers
- Single-tie/ the products of one provider
The regulator also plans to tackle clawed back commission, making the current voluntary questions mandatory.
It says the information is “a good indicator of potential churning or miss-selling and we need it from all relevant firms in order to obtain full benefit from the information”.
The FSA says: “in conjunction with product sales data and income details, this depolarisation status can be used to indicate whether there is a higher risk of product bias.”
“For example, firms that offer customers the option of paying by fees, versus commission alone, will have less incentive to recommend a product on the basis of commission.”
Click to access the Consultation Paper.
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