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Theoretically, by the time you read this, we should have some idea as to whether our industry is going to be reshaped. Will the current regime be frozen or is there going to be meltdown?

By Hallowe&#39en, a day for tricks or treats (and, co-incidentally, my birthday – I&#39m 29!) – the FSA is due to make its recommendations on polarisation to the Treasury, having considered the responses to its consultation paper.

The fear of many is that the FSA is going to recommend the end of polarisation as we know it, thus blurring the whole issue by the introduction of multi-ties and other less clear forms of distribution.

Virtually anyone who understands the industry is against this, from professional organisations such as Aifa and Sofa, through to the Financial Services Consumer Panel and the Consumers Association – and now the PIA board itself.

So, the professional bodies are against it, the consumerists are against it and the regulatory body that understands the market is against it.

As quoted in Money Marketing, the PIA board stated: “Consumer understanding of the marketplace through polarisation is an important public good which could be damaged by substantive change. Blurring the choice of channels of advice and distribution would not encourage consumers to shop around.”

The board said a strong IFA channel is necessary and changing it could cause substantive damage to consumer understanding of the marketplace. So why is polarisation even an issue? Is there some hidden agenda at the Treasury and FSA that we do not know about?

Let us think back to why polarisation was introduced in the first place. Prior to the Financial Services Act in 1986, there was no distinction made between advisers who sold products from right across the market and tied agents. This meant consumers would often buy products thinking they were getting impartial advice when, in fact, their adviser was a representative of a limited number of companies.

Polarisation was introduced to protect consumers and ensure clarity in the status of advisers. In the main, I believe it has worked well.

But, apparently, the polarisation rules “appear to have some anti-competitive effects, largely by blunting competition in the tied channel”, according to London Economics, author of the FSA&#39s consultation paper.

An excerpt from this report about gap filling says it all: “In the tied channel…the importance to providers of protecting their brands is likely to prevent firms from buying in poor quality products.”

Yeah, right! Let us not doubt the integrity of those decent tied and multi-tied chaps but instead focus on those nasty grasping independent guys. Time for a reality check, I think.

It would be nice to believe that is why the entire financial services division of London Economic resigned last week.

With literally thousands of products to choose from, how can narrowing the range down to a handful be in the best interests of the consumer? Logic says independent advice has to be in consumers&#39 interests.

Sure, polarisation is not perfect and can be abused by people pretending to be independent but ditching it will not be in the best interests of the consumer.

Yet it becomes ever more difficult to trade and compete as an IFA, what with the regulatory and training and competence burdens imposed on small firms and, increasingly, networks too.

My network is launching a major service this week, UltraViolet, which hopefully will allow those committed to the IFA sector to do just that – survive and then thrive.

I have been an IFA in three decades (OK, I&#39m not 29) and believe in independent advice as strongly today as I have always done.

Let us keep polarisation and worry instead about other bigger potential threats to the consumer – such as regulating sales of financial services over the internet.


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