SimplyBiz says the FSA’s decision to end the payment menu and initial disclosure document is further proof that depolarisation has been a failure.
Managing director Ian Thorneycroft says few advisers will rue the demise of the documents and consumers seldom read them, with many finding them confusing.
He says: “Menus were brought in as part of depolarisation, which in itself has not been successful. Despite every effort, the fact is that clients find the menus confusing and unhelpful, particularly the commission table.”
Tenet group distribution and development director and Keith Richards says the timing of the move surprised him. He says: “This is not unexpected but it is sooner than we had anticipated. It is a safe harbour to continue using it but we will consider our position and the most appropriate way forward.”
Anand Associates managing director Bhupinder Anand says: “I am pleased because I think it was a complete waste of time and actually hindered the relationship with clients in the sales process rather than helped it.”
However, ThorneycrOft believes that the payment menu did have one positive effect by making advisers identify the value of the advice they give.
He says: “It has forced IFAs to think about what it costs them to give advice. We have seen a significant increase from 5 per cent who were charging fees or recurring income three years ago to 18 per cent now.”
IFA Promotion chief executive David Elms says: “We are concerned about what will replace the menu and initial disclosure document. Both provided a level playing field between different advice channels and made it clear to consumers that one way or the other, advice costs money.
“This inevitably encouraged more advisers to explain the value of their service better and led more consumers to pay for advice by offsetting fees with commission.”