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&#39DPS will undermine independence&#39

Standard Life is focusing its response to CP121 with an attack on the defined-payment system and warning that undermining the IFA sector will not help consumers.

The company is also concerned that product providers may use equity investment in IFA firms as a means of influencing distribution to the detriment of consumers.

It says the DPS will cause IFAs to migrate away from independence as it is more expensive for product providers to distribute through them.

The life office says the DPS could also cause difficulties with VAT and with client-money-handling rules, which would require more onerous capital adequacy and accounting rules.

Standard is broadly in favour of multi-ties if it introduces more choice to the tied end of the market. It says consumer interests could be harmed if multi-tie distribution deals are based purely on commercial terms and lead to commission levels being driven up.

It also suggests the indirect benefit rules could be altered to allow technological assistance and says it would support an industrywide load scheme for IFAs on the Pass model.

Strategy and business development manager Janey Smith says: “We should be building on what IFAs have achieved rather than destroy it. There are a number of areas where IFAs have been very important, such as stimulating competition between providers. Depolarisation could potentially detract from some of the progress made in the last decade.”

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