It is unfortunate that the FSA takes a view that the small IFA does not provide good advice, sells all policies on commission and does not offer fee-based advice.
I have been in this industry since 1983 and have a substantial number of satisfied and wealthy clients. Some pay fees and some do not.
Many clients are happy with commission/ factory gate pricing and this route is often the only route they can secure a comp-etitive product as they do not have sufficient savings to pay fees.
The FSA has already decided that because the small IFA creates a difficult monitoring problem the answer is to increase capital adequacy to, say, £50,000.
All this will do is force the small IFA out of business and the net result is less financial advice being provided. The FSA would force many professional IFAs out of business.
Only 12 per cent of complaints come from the FSA sector yet over 65 per cent of product is sold through this channel. Less than 25 per cent of the complaints are upheld.
The current model is “not broken” and works very well. The regime of professional qualific-ations promotes the expertise of the adviser.
These qualifications perhaps should be discussed with client at meetings rather than how much they earn from a particular product if sold.