Aifa says there is a lack of logic behind the retail distribution review and reaffirmed its view that whole of market advice is an essential condition for independence.
In the third of its RDR Issues Papers, Aifa says the RDR proposals could devalue the strong brand that consumers associate with the word independent.
Deputy director general Fay Goddard says there are only two options worthy of debate. Whether the term independent is used by whole of market professional financial planners and general financial advisers remunerated by fees/customer-agreed remuneration only or whether it is used by PFPs and GFAs offering a fee/CAR option but also using traditional commission if clients prefer.
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.
At the retail distribution financial services summit in London last week, the FSA’s RDR head Amanda Bowe said many respondents to the RDR believe independence must be limited to whole of market and said: “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?”