The FSA has questioned whether the majority of respondents to the retail distribution review calling for independent to mean whole of market have thought “deeply enough” about the issue.
Speaking last week at an ABI conference in London, director of small firms Stephen Bland said even just two weeks into the RDR consultation it is “pretty clear on the majority view!”
He said the FSA asked the question over the relationship between independence and whole of market to provoke debate on the meaning of the word “independence” rather than because it wanted to make such a change at the moment.
“It has clearly provoked but I wonder whether many have really thought deeply enough about the question,” he said.
Bland also warned that the general financial adviser category, which would cover the majority of advisers, may be temporary unless the regulator gets its way over its controversial plans for capital adequacy and professional indemnity insurance.
He said higher prudential requirements may mitigate the risk of misselling with a greater commitment to ongoing business and incentives to control conflicts of interest. Bland said: “Without them, there would be less of a case for allowing general financial advisers to continue as a regulatory category of firms without a sunset clause of some type.”
He said FSA primary advice plans were among the “greenest of the green” proposals in the RDR and said primary advice might be a more profitable approach for many IFAs.