First Direct launches its telephone-based IFA service this week under the brand First Direct Capital.
The internet and phone bank has so far invested £3m in the service, mainly meeting regulation, compliance and staff needs, while a further £3m is being spent on marketing.
The bank has recruited 52 IFAs and plans to have 100 IFAs by the middle of the year. To date, most have been rec ruited internally but the bank predicts this will eventually change to a 50-50 split between internal and external.
First Direct Capital says, rather than commission, advi sers will be salaried and in the same bonus scheme as other First Direct employees.
All advice from IFAs will be phone-based. Consumers will have access to any life insurance, pension and investment product on the market and a Cat-standard mortgage from HSBC. It is also setting up a share-dealing service soon.
The new service initially targets First Direct's one million customers. It is expected that 70-80 per cent of customers will get information online and then seek phone advice from an IFA before buying a product.
First Direct chief executive Alan Hughes says: “Our service is different from online fund supermarkets and IFAs offering face-to-face advice as it removes the danger of a consumer being overwhelmed with information and misbuying.
“We anticipate much of the market will follow, due to the changes likely to be bro ught about by polarisation and Cat-standard products which consumers are likely to compare all products with.”