I refer to your article regarding the multi-tie system and IFAs (Money Marketing, April 12). I would like first to confirm that I and the Conservative Party remain wholly supportive of the IFA industry and, as I have commented publicly on many occasions, I believe it has been unfairly treated by the Labour Government and under the pension review process.
Your article presents the wrong gloss on what the Conservative Party is saying about polarisation and, in particular, about the need which we stress for the public to have absolute clarity as to whether they are dealing with a genuine IFA or a tied agent.
The underlying objective of the polarisation regime has been to achieve a clear demarcation line and clarity for consumers as to whether they are receiving genuinely independent financial advice from an IFA or they are dealing with a tied agent selling a limited range of products which they represent.
One of the problems has been that, while adhering to the periodic performance qualification requirements, it has been possible to operate, in effect, as a multi-tied agent within the IFA ground rules. This is a territory which needs some reform and greater policing.
We are not proposing a third category of multi-tied agent but rather that those who operate on a multi-tied basis, as well as on a single tied basis, should be required to declare that they are tied agents and to state this on all their literature. Such transparency has not always existed under the polarisation regime.
The crucial point, in the interests of genuine IFAs and which I believe genuine IFAs should support, is that the basic reason for polarisation should be reinforced and strengthened to provide totally transparent clarity for the consumer as to whether he is dealing with a genuine IFA or a tied agent.
“Independent” needs to mean what it says and to be clearly and transparently branded. Without the “IFA” and “tied” branding which we are suggesting, the changes to the polarisation regime which are already occurring in relation to stakeholder pensions could undermine the whole reason for the polarisation regime in the first place.
In short, if businesses are obliged to state on all their letters and literature whether they are an IFA or tied and to advise clients or potential clients of their status up front, and if this territory is then properly monitored by the regulator, I would have thought that it could enhance the position of the genuine IFA.
Howard Flight MP
Shadow Economic Secretary to the Treasury