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Advisers must show the value of their service

IFAs must articulate the added value service they offer to consumers if they are to convince the regulator of the need for independent financial advice, according to Aifa director general Paul Smee.

In his speech to the FSA polarisation open meeting, Smee said polarisation has been a force for good and without it IFAs could not have reached the level of expertise and professionalism they have achieved.

He said if multi-ties are allowed, the industry will turn in on itself and engage in a race for distribution, setting it back at least two years, which would only serve to damage how it is perceived by consumers.

Smee conceded that there are problems, the undercapitalisation of the IFA sector and the lack of strength of the brand name of independent financial advice being key among them, but said it will not help anyone if its strengths are forgotten.

He warned the regulator of the cost of getting it wrong if it pushes ahead with reform of polarisation and that there will be no easy recovery from a wholesale destruction of the present system.

Smee said: “The virtue of polarisation is its clarity. A more obscure system will impact on consumer confidence as well as consumer education. The FSA should not end up in a position where investors obtain one sort of advice but believe it to be different.”

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