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Aifa presses FSA for basic rethink on DP plan

The FSA is reeling under the weight and clamour of the response to the CP121 consultation, with over 500 replies. Here and on pages 9 and 10, we publish some of the industry points that have been made

Aifa is calling for a fundamental rethink of the FSA&#39s defined-payment system proposals set out in CP121.

It has branded the defined-payment system as impractical, bureaucratic and likely to lead to a significant reduction in the number of IFAs.

Instead, it is proposing a menu option where IFAs would inform clients up front about product options and the cost of remuneration to reassure consumers that there is no bias.

It is also concerned that the FSA&#39s response to the small amount of commission bias detected is not proportional to the problem it is intended to solve. It argues enforcement action against those few guilty of biased recommendations is more cost effective than an attempt to restructure the market.

Aifa director general Paul Smee says: “There is more to independent advice than the method of remuneration. In particular, there is freedom from any contractual tie between adviser and provider and access to the whole market. We agree that IFAs must be open about their remuneration and should offer a choice of payment methods including fee and commission.

“This is a less one-dimensional approach to independent advice than appears in CP121. As currently drafted, the FSA&#39s defined-payment system does nothing to address the Government&#39s concerns over the savings gap. In fact, they might make it worse.”


Friends Ivory & Sime snaps up R&SA&#39s fund manager

Friends Ivory & Sime has announced its intention to purchase the UK fund management arm of Royal & Sun Alliance for £240m.Under the terms of the contract, FIS will also manage R&SA&#39s life and general insurance funds exclusively for the next 10 years. The deal will see FIS&#39s funds under management increase to £70bn from […]

Pru chief Wood defends &#39important&#39 WP

Prudential chief executive Mark Wood has defended the role of with-profits products, saying they are too important for the country to be killed off.Speaking at Prudential&#39s with-profits roadshow in London last week, Wood said the combination of CP121 and the Sandler review presented challenges for product providers and IFAs alike but he said the Pru […]

Fee-based advice will hit clients

It is a very sad day when, having practised for 33 years as an IFA and having done so without a fee being paid by our clients (without a murmur of discontent from a very large client bank), potential legislation is being suggested to force me arbitrarily to charge fees if I wish to retain […]

Temple stresses importance of clear distinction

A clear distinction between an intermediary advising on the whole of the market and a multi-tied adviser is the key to a level playing field for financial services, according to RJ Temple.It argues it is more important for consumers to understand the difference between whole of market and tied advice than whether an adviser is […]


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