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Flight says multi-ties will damage consumers

Multi-ties will result in investors being sold expensive, ill-suited products because multi-tied agents will not offer best advice, according to Shadow Paymaster General Howard Flight.

At the Financial Services Forum, Flight told Treasury economic secretary Ruth Kelly that the FSA&#39s proposals will damage consumers across the spectrum.

He said the middle-classes will lose out because tied agents will go multi-tied and sell products with the highest commission as they will not be obliged to offer best advice as IFAs are. Clients of IFAs will not benefit because they will be forced to pay fees, despite many preferring to pay commission for tax purposes, claimed Flight.

He said: “The proposals are going to cause infinitely greater problems than those they are seeking to address. Multi-tied agents will have no obligation to offer best advice, so you will run the risk that the great majority of people in the middle-classes will be sold more expensive products than need be the case.

“And then you have the ridiculous nonsense that IFAs have to charge fees even though most of their clients would prefer to enter into commission arrangements.”

Liberal Democrat trade and industry spokesman Vincent Cable said his greatest concern is that there will be no one left who can genuinely be considered to be independent.

He said: “You may shake up the industry and it may be more efficient but if you create an environment where there is nobody who can genuinely be said to be an independent financial adviser, then I think you have really lost something.”

Kelly said the matter was primarily one for the FSA to deal with but she claimed there is a compelling case for reform because of the lack of transparency in the industry.

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