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Davies claims trees are a tool for IFAs

Decision trees are designed to be a tool for IFAs rather than a device for consumers to use on their own, FSA chairman Howard Davies has claimed.

Davies made the comments while speaking about the FSA&#39s consumer education programme at a fringe meeting during Labour&#39s annual conference in Blackpool last week.

Providers say the claim marks a definite change of strategy on the part of the FSA and many say it is recognition of the fact that they have failed. Decision trees currently exist for stakeholder pensions and are due to be applied to annuities. Sandler has also floated the idea of extending them to his stakeholder suite of products.

IFAs have long been critical of decision trees, saying they could lead to consumer misbuying. As recently as January, the FSA admitted decision trees and league tables had been a “double whammy” for many IFAs, replacing the role they play. The FSA says Davies&#39 comments are not a “great policy change” and that it reflects FSA thinking.

Davies said: “We have created decision trees, which enable advisers to better advise and serve their clients.”

LIA head of public affairs John Ellis says: “It is a recognition of the reality of the situation that many clients will not work through them without help from advisers. I think they are really ineffective devices because people need more information when dealing with their financial matters.”

Aifa director general Paul Smee says: “The idea of decision trees getting rid of the adviser has been rendered inoperable.”

Clerical Medical pensions strategy manager Nigel Stammers says: “The original intention of trees was to help customers on an execution-only basis. If the FSA is now saying they are a tool for advisers, that is a definite change of tack.”

•Comment, p35

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