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A defining moment

Is it conceivable that the French, Germans and Italians will be able to get independent financial advice and pay commission while the British cannot?

The European Commission has changed its mind about restricting independence to fee chargers in the investment services directive. CP121&#39s defined-payment system of fees or agreed commission to pay fees looks increasingly out of step.

The irony is that the UK is the place in Europe with greatest access to independent advice yet it is the place where access could be denied. It is as if the FSA – or perhaps the Treasury – felt it necessary to pump-prime multi-ties.

Commission may be open to abuse but the proposed defined-payment “remedy” is no such thing. It simply denies consumers the choice of fees or commission because in reality most advisers cannot adapt quickly enough, as IFA groups such as Inter-Alliance, Positive Solutions and Misys have acknowledged.

Authorised advisers may look to the whole market but many believe the move will be the thin edge of the wedge for multi-ties.

The inclusion of the defined-payment system in CP121 represents two faces of the split personality of the regulator. For good or ill, CP121 represents its liberal-ising face but, as if the organisation could not bring itself to lose complete control, defined payment is a massive intervention.

Money Marketing sympathises with the intentions of defined payment. We have long said that IFAs must diversify towards fees and trail. But the current plan and timetable represent little more than a petulant attack. The FSA should take its cue from Europe, listen to consumers and the industry and abandon defined payment.


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