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FSA could replace DPS with menu

The FSA is giving serious consideration to a menu system alternative to the defined-payment system after asking Aifa and a working party of providers develop the idea.

The report put forward proposals allowing consumers to make comparisons of the cost of advice between different IFAs and between different distribution channels. This is in response to the FSA asking how the menu option, first set out in Aifa&#39s CP121 response, could apply across all kinds of advice, including tied and multi-tied.

The report also proposes a generic price list for typical transactions rather than the declaration of the exact price of advice at the initial meeting proposed by Ron Sandler.

Scottish Equitable manager of business development Steve Cameron says: “The menu will provide consumers with greater understanding of the benefits and costs of advice. It meets the FSA&#39s objectives without causing the collateral damage to IFAs of the DPS.”

Aifa director general Paul Smee says: “This looks like very good news for advisers if the FSA is seriously considering alternatives to the DPS, which has won no friends.”

Needanadviser.com director Ashley Clark says: “I welcome anything that clarifies the remuneration of different advisers but remain sceptical until I see the specimen definitions.”

FSA spokeswoman Louise Buckley says: “We are looking at a number of options alongside the DPS but have not yet reached any conclusions.”

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