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Disclosure upheaval would aim to clarify adviser classification

A radical overhaul of the disclosure regime is being called for by the FSA, including scrapping post-sale confirmation letters, which it claims would save the IFA sector over £37m.

The FSA makes recommendations in its consultation paper which it claims will “enhance” disclosure and ensure clients know what type of adviser they are dealing with.

It says consumers should be aware of advisers&#39 qualifications and the range of choice in the advice market to make them more likely to shop around.

The FSA has researched new forms of written disclosure and believes advisers should use terms of business letters with a tick-box section at the top showing all the possible options of advisers and which category that they fall into.

It claims that people are confused about how advisers are paid and to tackle this it wants to “unbundle” the cost of advice from the cost of the product.

However, IFAs believe that any cost savings from the move would be countered by the changes they would have to make under the new rules and other regulatory costs.

Sofa director Tudor Taylor says he welcomes clarity on qualifications and disclosure but the term IFA is clear to consumers and anything that changes it will cause problems.

IFA Best Advice partner Paul Banfield says: “Any saving made by not sending out these letters will be eaten up in other ways, like having to set up new administrative procedures.”

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