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Fees cap may be brought in to help public get quality advice

The FSA is considering the case for a cap on fees that IFAs can charge clients in a move to allow more people access to quality independent advice, says director of conduct of business standards Michael Folger.

Speaking at the regulator&#39s open meeting on polarisation in London last week, Folger said fees prevent people from getting the advice they need and the FSA may consider a fixed rate that advisers would be allowed to charge.

Folger, who is widely seen as chairman Howard Davies&#39s second in command, chaired the meeting and made the fixed fee comments in res-ponse to a question from the floor. He did not mention a similar cap on commission-based advice.

The maximum commission agreement was struck down by the OFT in 1988 for being anti-competitive. OFT acting head of news Mark Kram says if a similar charge cap on fees was introduced, there still could be competition concerns.

Folger also questioned whether a way exists for cash to be injected into the system, suggesting that the regulator is considering a method whereby the Government or the industry contributes money to pay for financial advice.

The Liberal Democrats made a similar suggestion at their party&#39s conference last month in Bournemouth.

However, the FSA says Folger was speaking from a personal point of view and that his views do not reflect official policy.

Folger said: “The move towards fees could be a barrier to advice. There could be a way to have a fixed fee over a period of time. Perhaps there is also a way to inject funds into the system.”

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