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Industry waits for picture to clear

There remains a great deal of confusion and disagreement over Ron Sandler&#39s proposals for how IFAs are paid.

Sandler believes the plans represent a liberalisation, as does Aifa. The LIA does not while Sofa is welcoming the payment proposals subject to VAT being sorted out.

Sandler suggests that payment can go to the IFA from the provider as long as the amount and method is pre-agreed with the client.

We think this means that some form of commission continues but not one in which the provider can pay more to an IFA to gain some type of real or imagined influence over the sale. This,arguably, is a marginal liberalisation on the FSA&#39s defined-payment system and is certainly clearer, although still fraught with practical difficulties.

Sandler is more Draconian than CP121 over advisers which operate beyond the new independent sector. Sandler would stop those happy to become authorised advisers under CP121 from calling themselves either independent or adviser, a clear blow, although he says little about how they are paid.

The pecking order of Sandler and CP121 is very difficult to judge – the FSA has power over its own final rules – but Sandler has the moral authority of a Treasury review. The FSA has made some approving noises about new solutions but this extends not just to Sandler but also to Aifa&#39s payment menu.

The first indication will come from the FSA&#39s response to its CP121 consultation, due in September.

It may also depend on how the Treasury responds to Sandler although it could see more differences of opinion. The FSA at some stage publishes draft rules – then final ones. Clear as mud, then, many IFAs will say. Correct.

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