IFA Promotion chief executive David Elms has criticised the Forum for Fee-Based Advice, saying its service is being offered prematurely and risks misleading consumers.
The forum provides a search engine facility for consumers to find advisers that charge fees and has grown to a total of 70 member firms since its formation in November last year.
But Elms says that as there is no widely accepted definition of the term fees, the forum could be confusing consumers.
He says: “There is a risk in members presenting themselves as fee IFAs. They might have a definition of what that means but the vast majority of IFA firms are using the terms fee-only and fee-based interchangeably to mean different things. The problem is that we do not have an overarching definition from the FSA of fees, let alone what fee-only and fee-based mean.”
But forum spokeswoman Gill Cardy argues that it is using the FSA’s original definition as stated in the initial disclosure documentation.
She says: “The definition is that you agree a fee in advance. If you use commission to offset, you do not take any surplus and any surplus is either reinvested or returned to the client.”