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FSA drops DPS for Aifa&#39s menu system

The FSA is dropping its defined-payment system in favour of Aifa&#39s menu system, leaving IFAs free to be paid commission as long as they offer consumers a payment menu including fees.

But the FSA is also propo-sing that for popular products IFAs must give a comparison of the commission they earn with the market average. Some IFAs say this is tantamount to a return of the maximum commission agreement.

The FSA says it plans to extend the menu option across the market, meaning that the remaining direct salesforces may have to disclose what they are being paid up front instead of later in the sales process.

Many IFAs and product providers have welcomed the news, hailing it as a case of common sense prevailing over vested interests.

They say it will allow advi-sers to continue giving whole of market advice without dropping the independent brand and not being forced to multi-tie themselves to a limited group of providers for reasons of economics.

Under the plans, the menu will spell out what services an IFA will offer and what options the consumer will have in paying for advice.

Syndaxi Financial Planning principal Robert Reid says: “This is a return to the maximum commission agreement in all but name. I think that they will have to be very careful from a competitive point of view.”

Scottish Life head of communications Alasdair Buchanan says: “The FSA has been going in this direction for a while ever since it preferred not to have Authorised Financial Advisers. It is a triumph of common sense.”

FSA head of retail projects David Severn says: “Some constructive proposals came forward in the responses to CP121 and, of those, the menu option offers the best route for us to achieve our objectives.”

Aifa director general Paul Smee says: “I believe that this secures a vibrant and consumer-focused independent sector.”

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