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&#39Ninety per cent of IFA firms will take the multi-tied route&#39

FSA plans to limit commission could force up to 90 per cent of IFA firms to become multi-tied, with Bankhall and Tenet Group saying they will offer a multitied option.

Some advisers believe that in the worst-case scenario, just 10 per cent of firms will operate on a fee basis while the rest multi-tie, allowing them to continue to get commission.

The FSA consultation paper warns that abolition of polarisation will see “a reduced IFA sector” and a growth of multi-ties as advisers wanting to call themselves independent are forced to switch to a defined payment system. The changes will separate those able to make the transition to defined fees from those who cannot adapt revenue streams quickly enough.

Many firms, particularly smaller IFAs more reliant on commission than fees, are predicted to find switching to fees too costly on the heels of increased costs of compliance.

Bankhall operations dir ector Tony Murrell says: “We see no sense in fighting a lost battle or trying to maintain the present structure.

“Polarisation has finished and we have to accept if a multi-tie operation is a thing we need to offer, then we will.”

Willis Owen managing director John Owen says: “There will be a divide among IFAs, with maybe 10 per cent of firms doing fees and the rest, including networks, forced to go multi-tie because of the pressure on commission.”

Informed Choice director Nick Bamford says: “I am feeling very optimistic. If you are a professional independent practice offering a quality advice service, you can continue as you are now. I am confident I will be an IFA in a year&#39s time.”

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