Aifa has joined fellow trade associations Sofa and the LIA in backing gap filling in its response to the FSA-commissioned London Economics report on polarisation.
Gap filling, also known as white labelling, lets a provider plug gaps in its range using another provider's products and marks a limited move away from full polarisation, which Aifa had previously championed.
The news comes as MM discovers that the Financial Services and Markets Act contains clauses which mean the final decision on polarisation could be handed to the Competition Commission by the OFT. This will happen if the OFT director general decides the FSA's final proposal on polarisation will have an adverse effect on competition.
Aifa believes that, while it still supports the “architecture of polarisation”, gap filling would allow the current regime to deal with specific problems such as the position of fund supermarkets. But it calls for clarification on what is meant by the term.
The LIA says white labelling is the “least damaging” to consumers of the four options in the LE report – multi-ties, depolarising collective investment products, likewise for Cat-standard products, and retaining the essentials of polarisation but allowing gap filling.
Sofa says gap filling is the clearest options for consumers but warns it would lead to a dramatic fall in the number of IFAs within five years.
Both the LIA and Aifa submissions slam the LE report for not considering the status quo. Sofa's submission has not criticised the LE on the status quo because it says there is no point, given that change is in the offing.
Poles Apart, p5;