Paradigm Norton Financial Planning director Barry Horner told the BBC of the huge burden he believes will be placed on firms in replacing their disclosure documents with whatever the FSA come up with as a substitute to the menu and IDD.
Horner said the adviser industry had already gone through massive upheaval in getting ready for the implementation of the menu and IDD as part of depolarisation.
He said consumers were no clearer now about what they pay for financial advice than they were in 2005 before the documents were introduced.
Syndaxi Financial Planning managing director Robert Reid said the adviser community had been given no indication the FSA was going to make this decision and the move “leaves the public floating around hoping they are getting the right information”.
He also warned the U-turn could make adviser status disclosure more confusing.
The FSA withdrew its applications to retain the IDD and menu as part of Mifid after it became apparent in recent meetings with the European Commission that these applications would be rejected.
It also published a report which found no consistent evidence that the menu had achieved its objectives through reducing commission levels or increasing the share of advice paid for by fee and only limited evidence that the menu had reduced provider bias in sales.
It says it will continue with its post-depolarisation research to look at possible measures that would achieve the objectives of the menu and IDD but this work will not be finished by November 1.
In the meantime, the FSA will implement the Mifid information requirements on November 1, temporarily supplemented by the Menu and IDD as guidance to these rules until its research is completed.
Meanwhile, Apcims has welcomed the FSA’s decision saying the measures would have created an unfair burden on UK firms compared to their European counterparts.
Chief executive David Bennett says: “Apcims welcomes this decision by the FSA, as it demonstrates that the regulator does take account of the views of the financial services community and is prepared to take a pragmatic view when implementing new rules.
“The proposed super-equivalence would have created an additional, unequal, burden for FSA regulated firms in the UK, putting our firms at a competitive disadvantage to those based in other EU countries.
“We also applaud the determination EU Internal Market Commissioner Charlie McCreevy has displayed in combating any gold plating of Mifid rules by any of the Member States.”