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Declaration to consumer replaces better than best

The FSA is to scrap the better than best rule, replacing it with a declaration to consumers of any financial ties to providers and a prohibition on sales targets linked to inward investment as part of consultation paper 166: Reforming Polarisation.

As proposed in CP121 in January last year, the draft rules for depolarisation will see the end of the rule which prevents IFAs placing business with providers owning more than 10 per cent of their firm unless they can demonstrate it is the best product available.

The regulations obligate IFAs to tell consumers about provider holdings in their firm of more than 5 per cent and ban any form of sales targets or similar incentive from providers to invest in their firm.

Firms doing more than 20 per cent of their business with any one provider will be compelled to inform the FSA and explain why. IFAs must also reiterate their links to providers at the point of sale if the product is from one of their backers.

Providers and IFAs say the new rules are sufficient to protect the independence of firms receiving investment.

Skandia Life managing director Nick Poyntz-Wright says: “We would welcome the move as the current regime has been somewhat artificial and there was a need to knock down the barrier to investment in IFA firms.”

Franklins Financial Services partner Neil Franklin says: “If you want to be a national IFA, you need capital and the easiest way to get that is from providers. I do not think IFAs will have any problems meeting these criteria but I also do not think that consumers particularly care.”


Out of context

•”Even my mother gives me a hard time for being an actuary.” – Scottish Equitable sales actuarial director John Quinlivan.•”I came away from school with a funny one.” – Yorkshire Building Society PR David Holmes on picking up a regional accent.•”My landlady last night is the lady IFA of the year.” – Prudential Premier Mortgage […]

Widows goes into gobbledegook to slash payouts

IFAs are accusing Scottish Widows of going against the spirit of the Raising Standards initiative with its “opaque” with-profits bonus declaration which sees many payouts cut by up to 22 per cent and others getting no terminal bonus.Widows, a front-runner in the ABI initiative which extols the virtues of plain English, has been attacked for […]

FSA says proposals won&#39t spark IFA shift to multi-ties

The FSA is predicting that very few, if any, IFAs will decide to go multi-tied as a result of its proposals in CP166.Although not providing any further details on numbers, head of retail projects David Severn says the regulator&#39s research shows that most IFAs want to retain their independence, with most multi-ties likely to come […]

L&C passes on sub-prime leads

Mortgage IFA London & Country is passing sub-prime loan leads on to franchise group Mortgageforce and specialist broker and packager The Mortgage Operation, saying such business is not its core target market.L&C put the sub-prime business out to tender last year and has since signed deals with the two firms. The arr-angement with Mortgageforce starts […]

DB transfers – one more factor to consider

Jim Grant – Senior Product Insight & Technical Support Analyst We look at how higher DB transfer values could cause a lifetime allowance issue and how that affects the advice process. Advisers are receiving an increasing number of requests from clients looking to transfer their pension from final salary schemes to personal pensions. This is a […]


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