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Bank denounces depolarisation as providers go on the attack

The FSA proposals for depolarisation are coming under attack from some of the biggest providers once tipped to benefit most from the new regime.

In its response to CP121, Lloyds TSB criticises the proposals, saying they will lead to consolidation into a few stronger brands, decreased competition and customer detriment.

It says: “We see the distinction between IFAs and AFAs as a key area for customer confusion. The move away from widespread availability of independent advice that would be likely to follow implementation of these proposals is not obviously beneficial to consumers.”

It also warns that depolarisation could lead to hig-her commission levels and an expensive scramble for distribution, with the costs passed on to consumers.

The Abbey National Group and Standard Life responses criticise the defined-payment system while broadly supporting depolarisation. Standard Life says the DPS will force IFAs to move from independence and add an expense equivalent to 0.3 per cent in reductions in yield on pension contracts.

Scottish Equitable has conducted research which shows that only a fifth of IFAs will stay independent and it proposes an alternative to the defined-payment system.

Axa and Zurich have declined to make their resp-onses public.

Aifa director general Paul Smee says: “It is interesting that criticism of the proposals does not just come from IFAs but from much wider. This should cause the FSA to do some fairly profound rethinking of the way they want the market to change.”


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