The FSA has announced that it will proceed with the scrapping of polarisation as outlined in CP121.
It is also abolishing the “better than best” rules which prevents an IFA firm from recommending a product from a provider which owns more than 10 per cent or more of the firm.
The regulator says abolition of the rule will mean that IFA firms will be able to attract investment and increase their financial strength.
It also announced that it will be consulting on draft rules to give effect to its decisions in January and will mount a public awareness campaign to highlight the changes.
Announcing the decision at the Aifa annual dinner last night FSA chairman Howard Davies said: “The polarisation rule has not delivered the consumer benefits hoped for when it was introduced. We are convinced that freer market will help consumers more.
“In future consumers will find it easier to shop around for the best product and providers will be free of the anti-competitive constraints that have made it difficult for them to offer consumers that choice.”