Warning simplified advice poses systemic risk to IFAs

Laura Miller
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Simplified advice poses a "systemic risk" to IFAs because it opens them up to mass compensation claims for unsuitable advice, according to Prudential.

John Warburton, product director, said it is this threat which is preventing insurers from developing a simple advice proposition. Simplified advice has been generally viewed as a lighter service which will deliver an appropriate – rather than the best – outcome for clients. But Warburton said insurers are concerned the Financial Ombudsman Service (FOS) will apply the strict rules on suitability developed for individually-tailored advice to simplified processes, leaving advisers vulnerable to complaints and insurers open to accusations they had caused them. “Making simplified advic...

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