He says: “We refute absolutely the suggestion that ‘independence’ can be defined solely by an adviser’s method of remuneration. If the term independence is to retain any value, it must be linked to the adviser’s ability to advise across the whole range of products available in the market with no contractual ties to any providers.
“Otherwise we could be in the absurd situation where a direct sales person is able to hold themselves out as independent even though they are advising on a limited range of products.”
Cummings also challenges the FSA’s ‘primary advice’ proposal, stating that he does not believe the regulator’s assumption that ‘affordability’ is the reason why these consumers currently choose not to seek advice.
“The FSA is proposing that ‘primary advice’ consumers could be subjected to, for what for all intents and purposes is, a bancassurer model. This model is the one which currently generates by far and away the greatest amount of consumer detriment in the industry.”
He adds: “We are concerned that the FSA is proposing to reduce the protection available for these consumers with the reduction in detailed suitability requirements and without a price cap on the products which ‘primary advisers’ can sell. There is little detail in the paper about how the FSA is proposing to solve the problems which already exist in this sector e.g. incentivising sales of products via bonuses. “
“We support the need for the FSA to test these proposals. But the fact that the regulator has already published its ‘model for the future’ begs the question – isn’t this paper putting the cart before the horse? Shouldn’t these proposals however ‘draft’ have been backed up by research before they appeared in a discussion paper?”