Speaking at an all-party parliamentary group on insurance and financial services meeting at the House of Commons yesterday, Tyler said he accepts that there needs to be clearer disclosure on service labelling, but says using the term “restricted” is not the answer.
He said: “We think the word independent works, it resonates with the consumers and it should be the key differentiator between independent and non-independent advice. We have concerns on the label ‘restricted advice’. It could confuse and deter customers from actually taking out services that are labelled as such.”
“The restricted advice labels brings into question the quality of advice rather the restricted product range.”
But Lord Lipsey disagreed. He said: “I think that you are very lucky not to have been told that you just have to call it sales, which up to now is what it has been.
“I think the great benefit of restricted advice is that it feels slightly negative. Whether consumers understand what it actually means in detail does not terribly matter.”
Institute of Insurance Brokers president John Greenway and chairman of the group questioned Tyler over his resistance to the term, saying: “Is it that you do not like the word ‘restricted’ because it gives the impression that somehow the quality is restricted or are you unhappy about the actual tiering that is proposed?” But added: “We need to think of another name for restricted advice, and I take the point that is it advice at all. I don’t know.”
Which? economic campaign manager Doug Taylor says: “All is not agreed on the issue of labelling. There is yet to be a full consensus on a way forward in that area.
“Labels on advice must be clear and unambiguous. Advisers advise, sales people sale.”
But Tyler said current proposals to use the restricted label will lead to a reduction in consumer access to advice as existing advisers take this opportunity to leave the market.
He added: “There is better scope to use more second level descriptors that resonate with consumers and the FSA’s own research. We think there is a solution to be pursued in terms of simplified advice, a fully automated service which will deal with the mass market.”
Tyler says the BBA is currently pursuing this option with key stakeholders in the industry.