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ABI grab fails consumers’ interests

Aifa is accusing the ABI of having lost sight of the consumer interest. Director general Chris Cummings says the ABI has failed to put consumers’ interests first and its agenda is also anti-IFA.

The ABI has finally nailed its colours to the mast and says it wants to stop independent financial planners using commission offset. It is effectively saying that advisers must charge what might be called pure fees if they are to qualify for this sector.

It also says the category of general financial adviser should be temporary, a point on which many others, including the Investment Management Association, do not agree.

We question whether all ABI member companies agree with these statements.

Money Marketing believes the ABI’s latest statements confirm our stories when we reported the ABI wants a ban on commission for advisers – except, of course, for primary advisers – which the ABI believes it can control.

To suit the ABI, 20 years of regulation would have to be thrown out, including the FSA’s own recent research on the effectiveness of the suitability letter as consumer protection.

It is worrying just how much of the ABI’s thinking has infected the RDR. We do not think the RDR as it stands is fit for purpose because it is based on confusion as to what causes what effects while its proposed solutions will prove much worse for consumers than any perceived problems.

We back Aifa in its argument that it is in the interests of all advisers to oppose the RDR plans and urge all advisers, including financial planners, to do so.

We know there is a great deal of heat in the argument between some fee-charging and commission-charging intermediaries.

There is a case for reforms such as better minimum standards and understanding of payment options but that is not this reform.

We hope that most advisers come out against what is essentially a land grab by the insurance companies.

The ABI is not proposing a ban on commission for a new under-regulated direct sales channel. We would suggest that if anyone thinks the present system is bad – you ain’t seen nothing yet if the ABI triumphs.

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