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Fear over providers investing in IFAs

Almost 70 per cent of IFAs believe that providers investing in IFA firms will compromise the independent status of those businesses, according to a study by George Street Research.

Of the 204 companies surveyed in the research conducted exclusively for Money Marketing, only 19 say the image of independence will not be damaged by providers investing in their firms.

IFA firms across the board have responded negatively to the idea of accepting investment from providers, with 72 per cent of local IFAs, 67 per cent of national firms and 57 per cent of regional firms saying independence would be compromised.

Some IFAs reject the claim, however, saying there is alr-eady a number of IFAs such as Towry Law and Woolwich Independent Financial Advisory Services owned outright by providers.

A strong majority of all firms, regardless of their type, specialty or location, believe that providers will use the relaxation of the polarisation regime to buy a better distribution position.

The survey found that 170 firms believe there will be a dash for distribution as a result of the changes proposed by CP121.

George Street asked 204 IFAs a series of questions about their views on the proposed changes to the polarisation regime. The survey was conducted between February 11 and February 28.

Wentworth Rose managing director Philip Rose says: “You can run an independent business while still being owned by a product provider. I think it is a naive answer and I do not think it is true. As far as a dash for distribution, it is already happening.”

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