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Bestinvest concerned over better than best business

An IFA has raised concerns that the better than best rule is only being adopted loosely across the market.

The rule, which is due to be scrapped by the FSA after depolarisation, prevents IFAs from placing business with product providers which own more than 10 per cent of their firm unless they can demonstrably prove it is the best product available But Bestinvest head of communications Justin Modray says he is worried that the rule is loosely followed across the market and believes it is a backward step for the FSA to remove it.

Bestinvest does not take commission but instead takes income based on the value of clients&#39 investments.

Last week, Amvescap subsidiary Invesco Perpetual increased its holding in Millfield to 19.06 per cent. Together with its parent Amvescap, the group holds 24.11 per cent of Millfield.

A Millfield spokesman says the firm is aware of the need to monitor sales of Amvescap products and says there is no activity among its IFAs to suggest they are preferring one product to another.

FSA spokeswoman Ruth Excell says: “We are scrapping the better than best rule because it took a sledgehammer approach to the possible risk of provider bias in IFA recommendations.”

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