Aifa and the ABI have welcomed the FSA's menu proposals but believe that the plan risks becoming overengineered.
Aifa director general Paul Smee believes the menu will enable the value of advice to be spelt out alongside its cost which will boost consumer confidence. He feels the principal of equivalence is strongly backed by the FSA and, as it will apply across all channels, there will be no inference that commission is a second-rate way of paying.
Smee says: “Although this is probably over-engineered, with too many products, we broadly have the core now, and we can use this to demonstrate the value of advice.
“It is unfortunate but does seem to be focused on selling rather than advice. I think the answer would be to alter how the companies describe the services they are providing.”
ABI head of pensions and savings Chris Kenny says the reforms should allow the savings industry to operate within a more competitive and transparent market.
Kenny thinks the menu will make it easier for the consumer to shop around not only for the best product but also for a deal where they know and understand how much financial advice will cost them.
He says: “We are pleased to see there will be further consultation on the details of the menu because it will not achieve its goal if it becomes over-engineered. We need to study today's proposals to be sure they work fairly across all channels and look forward to continued discussions.”