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Adviser beware as market waits for answers

Can we suggest an adaptation of buyer beware – adviser beware. The FSA’s planned reforms might be curtains for half of advisers or there may be change which simply increases standards and improves disclosure at a rate which the industry can cope with.

Who knows? We suggest nobody does yet. If one takes the view of the PFS, then 10,000 will make it as professional financial planners. But how can anyone know that if we don’t know the timescale the FSA will apply and if general financial planner will be permanent. It feels like quite a lot of exams will have to be passed. We also don’t know what regulations primary advisers will face or what they can sell before we know if any adviser in their right mind would want to be one.

We don’t know what customer agreed remuneration means or not really. We know what the ABI appears to mean these days – a very strict interpretation – but don’t believe that all the ABI members agree for a second. Even a range of options would help – the FSA hasn’t really provided us with them.

Transact head of marketing Malcolm Murray argues on page 36 that advisers using his service will be fine in that they will meet Caris’ requirements, including the ABI’s version, because any fee comes from the platform and thus the client not the product.

He suggests therefore that IFAP’s David Elms’ and Robert Reid’s take on what the ABI means by commission offset, that is, it excludes almost all advisers from being professional financial planners, is not correct.

It is true that more will make this grade if the Transact firms use Transact for most of their business and, of course, they get or have got the necessary qualifications. That, of course, is if the regulator doesn’t crank up capital adequacy for those top-end advisers as well once it realises that the types of business advised on are potentially more risky in terms of detriment – pensions transfer anyone – regardless of whatever way they charge for it.

It will be months and maybe even years before we know who is correct, including this professional body and this platform. Much depends on whether one believes the FSA is playing with a straight bat. As we say, advisers beware.


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