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Consumers face charter for chaos

Consumers face a bewildering choice of up to five different types of financial adviser under FSA proposals to depolarise the market, say the Consumers&#39 Association and IFAs.

The CA has criticised the proposals, saying they will confuse consumers and give the high-street banks a stranglehold on distribution.

The FSA envisages direct salesforces selling their own or multiple providers&#39 products, multi-tied “distributor firms” advising on a range of providers, independent advisers and a final group offering generic advice.

IFAs fear some tied or multi-tied advisers will masquerade as independent.

But FSA head of polarisation review David Severn calls the CA “misguided” and “daft” for maintaining its support for polarisation, and says the plans will benefit consumers.

IFAs say the changes will take the industry back to prepolarisation times.

DBS chairman Ken Davy, speaking as chairman of the Money Management Council, says: “These reforms put the consumer in the pre-1988 position where we had a discredited system, which is why polarisation was introduced.”

“The IFA sector will be severely damaged, reducing choice for millions of ordinary people and result in independent financial advice only available for the wealthy.”

CA director general Sheila McKechnie says: “We are extremely concerned that the introduction of multities will significantly boost the power of product providers and high-street banks, giving them a stranglehold on distribution. We believe that overall the proposed reforms will be too confusing for consumers.”


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