Simply Biz believes the general financial adviser category proposed in the retail distribution review will become irrelevant if the top and bottom tiers are structured correctly.
In his latest paper on the RDR, Simply Biz chairman Ken Davy says that most IFAs should fall into the professional category but says it is necessary for this to include a transition period. This is to ensure that all advisers either meeting a minimum requirement of diploma standard or ISO22222, which is below chartered but higher than the current minimum requirement of FPC.
He says: “We believe it is completely illogical and counter-productive for the FSA to deny existing advisers the right to continue to advise their clients simply because they have not passed a particular exam.”
Davy says he does not see customer-agreed remuneration as a threat. He says commission has been disclosed to the client pre-sale and post-sale since 1991.
He says: “During that 16 years, our market share has moved from less than 30 per cent to well over 60 per cent so we do not see customer-agreed remuneration as a threat.” Davy believes the debate over commission versus fees could be removed as long as CAR is implemented as proposed in the RDR.
He says: “What this makes clear is that an adviser can agree with the client that their remuneration can be paid by the provider rather than the client having to write out a cheque. This should eliminate once and for all the sterile debate about commission or fees as everything will simply be treated as remuneration.”
Simply Biz also believes primary or basic advice, will not work and that any move to limit regulation in this area should include restricted access to the Financial Ombudsman Service.