There may be a 'home' for protection in the RDR's controversial 'sales advice' category, an influential market report suggests.
According to a study by Defaqto, protection is unsuitable for both the FSA's independent advice and sales groups, but could slot into a third - sales advice - a category dubbed "Frankenstein" by one industry critic.
The future of protection in a post-RDR world has been a subject of debate since the publication last November of the FSA's RDR Feedback Statement.
It proposed a radical re-structuring of the market, distinguishing between independent advice and a spectrum of sales services ranging from non-independent advice to execution-only.
Critics say one of its key suggestions - customer agreed remuneration (CAR), which implies a move away from commission payments for advisers - could spell disaster in protection as many consumers would be unwilling to pay a fee.
But Defaqto's 'Distribution, distribution, distribution!' report argues the FSA must find room for protection and suggests sales advice may provide the answer.
"There is potentially a home for protection in 'sales advice'", the paper concludes.
"Otherwise, if protection is placed in the advice category, then it raises the question of whether consumers would be willing to pay a fee for protection advice.
"If protection is placed in the sales category, no advice may be given and the risk of consumer detriment is high.
"Also, it creates the incongruous situation where an adviser can advise a client about their investment and pension needs but cannot offer any opinion to that same client on protection."
The report adds it "clearly makes sense" to have one regulatory regime for all classes of business "if clarity is to be preserved".
Following the publication of the Feedback Statement last year, Sesame's executive chairman Ivan Martin dubbed sales advice "a Frankenstein creation".
"I am tempted to conclude [sales advice] is nothing other than a sop to bankers who, having killed the goose that laid the golden egg, are desperate to ensure they can continue to peddle expensive investment products wearing a mask of respectability that comes from calling themselves advisers," he said.
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