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&#39IFAs sell cheaper products than tied salesforce rivals&#39

IFAs are demanding that the FSA gives more weight to its own research for CP121 showing they sell cheaper products than their tied salesforce rivals.

Although the research identified some IFA commission bias in relation to with-profits and distribution bond sales, overall, it shows that IFAs provide consumers with better-value products.

IFAs question how the regulator can deduce that consumer detriment is minimised by introducing reforms which will lead to a reduction of the IFA sector.

The research, from Cap Gemini Ernst & Young, shows that IFAs recommended products with a lower reduction in yield than tied agents across 11 out of 16 products and were cheaper than appointed and tied representatives across the whole market.

The paper also admits “the current regulatory regime had removed many bad advisers from the market”.

Yet it consistently refers to consumer detriment and commission bias at £140m a year on total sales in equivalent premium income of £9.8bn. The report does not consider potential bias under a multi-tied regime.

Wentworth Rose chief executive Philip Rose says: “The report makes a string of assumptions of commission bias based on the single area of with-profits bonds.

“You can almost smell the disappointment when you read the studies in the back of the report that show in the vast majority of cases IFAs were not biased.”

An FSA spokeswoman says: “There may be a reduction of IFAs but any IFAs can continue to operate as they are now.

“The point of the reform is to bring the term &#39independent&#39 in line with consumers&#39 expectations.”

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