Aifa says adviser-charging effectively creates free distribution for providers with the costs passed on to consumers and has called for an industry debate on the issue.
Policy director Andrew Strange says a sensible debate is needed as to how providers’ distribution costs should be assessed after the RDR.
He says: “After 2012, every provider of retail investment products in the UK will benefit from free distribution as, by definition, that is what adviser-charging is. There is no other sector where distribution is free for a manufacturer. It is about time we grew up and actually had a sensible debate about who is paying for this because at the moment it is the consumer.”
Strange says this debate would need to extend to questioning the funding model of the new Consumer Protection and Markets Authority.
He adds: “If the cost of distribution is to be borne by consumers, is there a debate about how the CPMA is funded that we should be having here?”
In its latest consultation paper on regulatory fees and levies, the FSA says it cannot justify further work to address the disproportionately high level of fees paid by advisers for indirect FSA costs. Aifa recommended the proportion of indirect costs paid should be linked to firms’ revenue.