Simplification fears lead to talks on streamlining

1 April 2010 | By Paul McMillan

The FSA is concerned about allowing lower qualification standards for simplified advice but is working with the industry to explore a streamlined qualification.

It says the majority of bancassurers and providers are against QCF level 4 for simplified advice as they believe that training costs would not make the model viable.

But the majority of IFA respondents and the Financial Services Consumer Panel support the same professional standards for simplified and full advice, with IFAs concerned that lower qualifications for simplified advice would give bancassurers a competitive advantage and lead to consumer detriment.

The FSA says there may be an argument for streamlining, rather than lowering, the qualification requirements if advisers are only focused on specific areas. “We remain actively engaged on this issue,” says the regulator.

It says: “We remain concerned that allowing a lower qualification standard for simplified advice would undermine our aim to increase the professionalism of the sector and could be confusing to consumers.

“We appreciate that there may be an argument in terms of proportionality and the content of the full standards, which may include detailed knowledge that would not be required in a simplified advice process.”

The FSA has decided to retain basic advice for stakeholder products, with commission payments still allowed. Advisers will have to disclose that restricted advice is being given.

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