In the third of its RDR Issues Papers, released today, Aifa says the RDR proposals could devalue the strong brand value that consumers give to the word independent.
Deputy director general Fay Goddard says the only options worthy of debate are whether the term independent might be used by whole of market PFPs and GFAs remunerated by fees/CAR only, or whether PFPs and GFAs offering a fee/CAR option but also using traditional commission if clients prefer could also use the term.
The paper asks if the only difference between GFAs and PFPs with the same service proposition is extra exam credits, how does this demonstrate independence?
It says it is not practical to restrict the word “independent” to a defined category of adviser and that instead it should relate to the scope of service and where the contractual obligation lies.
Aifa also says more thought needs to be given to how the increased use of platforms affects the debate around independence.
It supports the RDR call for a better labelling of adviser services but says the proposed new definition of independence contradicts this.
At the Retail Distribution Financial Services Summit last week, RDR head Amanda Bowe said many respondents to the RDR believe independence must be limited to whole of market and that “this may well be where we end up”.
Goddard says: “Research shows consumers understand and value the term independent. At a time when we are trying to increase access to advice and improve financial capability and education in the UK why is the RDR proposing to compromise this?”