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FSA says IFAs are still failing fairness test

The FSA is still finding widespread evidence of poor advice in the IFA market, according to managing director retail markets Clive Briault.

Speaking to an audience of IFAs at Money Marketing Live at Olympia in London last week, Briault said that although there are many well managed IFA firms, many others are falling foul of the standards that are required by the regulator and are not following the spirit of the principles of the FSA’s Treating Customers Fairly initiative.

He said: “The work that we have carried out across the sector has shown that poor advice is not a thing of the past. You just need to look at endowments, precipice bonds and, more recently, VCTs.”

“Although the quality of advice given to consumers is difficult to measure it is often clear that consumers are being given unsuitable advice. In the many cases of mystery shopping conducted, we found worryingly large incidences of poor advice.”

IFAs at the Olympia event reacted angrily to Briault’s comments and criticised the FSA’s Treating Customers Fairly initiative.

The Mortgage Practitioner IFA Danny Lovey said: “What about treating IFAs fairly? We presented KFIs that were clear and not misleading. Now customers cannot understand them. The FSA would have found it difficult to make a bigger dog’s dinner of this if they had tried.”

Anand Associates consultant James Brooke called on the FSA to regulate providers’ product literature.

He said: “The adviser is stuck between a rock and a hard place. There is only so much checking of product literature that we can do before we make that leap of faith. We are forced to distribute providers’ literature even though it might be a pack of lies.”

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