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FSA tells providers to monitor the quality of advice

The FSA has called for product providers to take more responsibility for the quality of distribution and monitor the quality of advice provided by advisers.

Speaking at the FSA’s annual asset management conference, chief executive John Tiner said although providers need not necessarily proactively monitor individual distributor behaviour, they should analyse what aggregate statistics say about the quality of sales.

Tiner said a consultation paper to be published this week will explore the relationship between providers and distributors and where responsibility lies. He called for providers to monitor persistency rates, sales, volumes and trends that can then be checked against projections.

He said: “The key thing is that data, once gathered and analysed, is acted on. It is surprising that many product providers are cautious about this – putting their reputation in the hands of others who ‘own’ the relationship with customers without necessarily providing clear, accurate information or actively considering distribution quality.”

The paper will also look at provider responsibility for providing the right type of information to the distributor, at the right time, so they can properly advise on and recommend a product.

Prudential has said it will look at identifying advisers carrying out high levels of transfer business and consider options such as severing agencies, cutting commission payments or reporting advisers to the FSA in extreme cases.

FSA director, retail firms division, Sarah Wilson told delegates it was not the FSA’s intention for providers to police advisers but that providers should take an interest in what their data shows about the quality of distribution.

Conference reports, p10

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