UK - Improved choice and greater access to financial advice would be available to consumers under radical new de-regulatory proposals set out by the Financial Services Authority (FSA) yesterday.
The proposals are the result of the FSA’s wide ranging review of the way in which financial advice is structured in the UK via the polarisation regime. They have been published for a three month consultation period and the FSA will reach final decisions in the summer.
Howard Davies, FSA Chairman, said: The extensive research we have carried out as part of this review demonstrates that the regime we inherited now represents a major market distortion and has simply not delivered sufficient consumer benefits to justify maintaining it.
The FSA’s proposals are:
* that the existing polarisation regime for financial advice be removed
* to strengthen the standing of independent advice, firms holding themselves out as ‘independent advisers’ will need to operate only on a defined payment system to remove the potential for commission bias
* the rules that limit investment in firms of independent advisers should be removed, which will help maintain a robust independent sector for advice
* that consumer awareness measures and disclosure obligations on firms should be used to help ensure that consumers understand the advice service that different types of firms offer
The FSA is also seeking views on potential wider changes, such as:
* the scope for a tailored advice regime to help deliver the benefit of financial advice more widely to the population, particularly among consumers on mid to lower incomes
* the ‘unbundling’ of product charges from the cost of advice to improve transparency for consumers.
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