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CA says CP121 represents FSA failure

Consumers&#39 Association director general Sheila McKechnie is warning the FSA it will have failed in its statutory objective to protect consumers if it pushes through with its polarisation reforms.

The CA is calling for all advisers other than IFAs to be called salespeople so consumers do not confuse them with a professional who is acting in their best interests.

Speaking to Money Marketing, McKechnie says if the CA had interpreted the Charles River Associates&#39 research into commission bias in the same way as the FSA has done, it would lose all credibility.

It was the CRA research which led the FSA to conclude that there is evidence of commission bias and led to proposals to prevent IFAs from being remunerated through commission.

The CA response to CP 121 says existing customers will be the biggest losers as providers buy up distribution and then try to recoup costs by subsequently raising charges.

It says the quality of tied advice will not improve as promised by the FSA but deteriorate because tied advisers are not competent enough to advise on suitability between products.

McKechnie says: “The implementation of the CP121 proposals would make us extremely reluctant in the future to see the FSA acting within its statutory objective to protect consumers.”

The FSA refuses to comment, saying it will respond in due course to all the responses.

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