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Consensus builds to back the limited advice option

A groundswell of support is building behind the limited advice option under FSA proposals for distributing Ron Sandler&#39s suite of stakeholder products, with IFA trade bodies and consumer groups claiming it is the only way forward.

Aifa, Sofa, the LIA, the Consumers&#39 Association and the National Consumer Council all say they would support a reduction in the scope of advice as outlined in the FSA&#39s discussion paper 19 published two weeks ago and warn that the other two options would lead to consumer confusion and misselling.

The warning comes despite the fact that the FSA says it favours a filter question or decision-tree-led approach to distribute the products.

The IFA groups and consumer champions say either decision trees or an execution-only basis with suitability warnings, which is the other option, would create the potential for massive misselling.

They say that unsophisticated and low-earning consumers, who are the target for Sandler&#39s products, are most in need of advice and that simple warnings or decision trees will only confuse them.

Discussion on the appropriate sales regime comes before the products themselves have been defined, with the Treasury expected to issue its consultation on the products in the coming weeks.

CA senior policy adviser Mick McAteer says: “Only the advice option is any kind of reasonable way forward. The other two are non-starters as far as we are concerned.”

LIA head of public affairs John Ellis says: “It is possible to reduce the level of advice a bit but you cannot write it out entirely. Limited advice is workable which is more than the other two.”

Sofa managing director Brian Lawless says: “With the other two, the opportunity for the abuse of regulation is huge because it will be too tempting to take advantage of consumers and push a hard sell.”


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