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Flight hits out at FSA claims over fees

Conservative shadow paymaster general Howard Flight is disputing FSA claims that consumers are prepared to pay fees for financial advice.

Speaking to Money Marketing at the Tories&#39 annual conference in Brighton this week, Flight said commmission is preferred bec-ause it is more tax-friendly to consumers as they do not have to pay VAT.

The FSA said at its polarisation meeting last week that its research found consumers are willing to pay fees and it is to look at ways to encourage them to do so.

But Flight says if the FSA is going to encourage fees, the Government must rem-ove the tax disincentives. He points out that fees are hit with VAT but commission avoids it. He also rejected the idea floated in the Sandler paper of reinstating a cap on commission, saying there are not many products which pay unreasonable remuneration to IFAs.

Flight was promoted to his current position after Iain Duncan Smith won the Tory leadership election although he retains responsibility for most financial services issues. He says: “I don&#39t find many people are bursting to pay fees. If you pay commission, you don&#39t have to pay VAT. If you pay fees, it is also out of after-tax income. If you want to move towards fees, you have to remove the tax.”

Polarisation meeting, p7

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