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Gap-filling to the fore as doubt is cast on multi-ties

The threat of full-blown multi-ties has receded after the head of the FSA&#39s polarisation review David Severn said a question hangs over their practicality.

Most delegates at the FSA&#39s open meeting on polarisation last week believe the smart money is now on gap-filling after Severn gave a strong indication that such a move could benefit consumers. This could see the tied side selling more products but no IFA conversions to multi-ties.

But Aifa director general Paul Smee and providers are urging caution. Smee believes all four options – complete liberalisation, multi-ties, product adoption or gap-filling and the status quo – remain on the table.

Severn, the head of conduct of business policy, also warned providers considering taking stakes in IFAs that the “better than best rule” was not going to be waived.

This has prompted Aegon, Clerical Medical and Norwich Union to warn about the undercapitalisation of IFAs. NU sales and marketing director Peter Hales wants the FSA to issue guidance on investing in IFAs urgently.

Severn also said the FSA was examining ways to make paying fees easier for consumers. At the meeting, he said: “We could go in for an opt-ion which saw more adoption of products in the tied sector. A lot of consumers use the tied channel and will continue to use it. There must be a bit of a question mark over multi-ties.

“Abolition of polarisation makes for good headlines but in practice we would have to replace it with more rules.”

Hales says: “Severn app-eared to cast doubt on multi-ties saying they might result in migration away from the IFA sector. We are pleased that the FSA is concerned about depleting the IFA market.”

Scottish Life head of communications Alasdair Buchanan says: “Taken in conjunction with Ruth Kelly&#39s comments, this was one of the most positive weeks for IFAs in many years.”

Prudential Intermediary Business distribution director Tony Kempster says: “David Severn is not the kind of man to speak freely without thinking very carefully first.”

A consultation paper will be issued before the end of the year.

AMP this week said its decision to buy Towry Law made business sense regardless of any changes to polarisation.

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