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Average adds to D-Day confusion

The depolarisation rules have been released, giving the go-ahead to brokers to multi-tie and allowing banks to widen their offerings.

But it also introduces a menu for advisers complete with market-average commission and, for tied advisers, commission equivalence.

The first calculations for these averages appear to be on the low side but is anyone really surprised? The idea that the regulator would build some slack into pricing rather than take an opportunity to tighten things is hardly unexpected. The rules will be reviewed in two years to see if they are working. The menu is expected to take six minutes to explain to clients, doubling the time added to the sales process and doubling the cost to 13m.

The Office of Fair Trading, the body that handed the Treasury the excuse to do away with polarisation in the first place, now has concerns about the impact of this average, saying it might lead to collusive behaviour among providers in terms of pricing.

It will be reviewing the final rules as a matter of course but it has already made its hostility clear.

So the uncertainty continues for some time. We also suggest the cost will be wildly underestimated, delays inevitable and teething problems more akin to extensive root canal work. Will it change the market? Yes massively. But how? Nobody knows yet.

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