A Treasury official has told the financial services industry that changes
to polarisation will be all or nothing, saying the only two options are the
status quo or scrapping the existing regime.
Questioned at a London conference this week, Treasury policy adviser Keith
Davis told delegates: “There are two options – to go no further with
changes or wholesale reform of the polarisation regime.”
But the debate has been complicated further with FSA head of business
conduct David Severn warning product providers not to count their chickens
on the outcome of the polarisation review, saying they may find themselves
worse off by acting on speculation.
But the odds shortened on the likelihood of change as Money Marketing this
week learnt that consultancy Charles River Associates, whose foun-ders
split from the now defunct consultancy London Economics, is working for the
FSA on phase two of the review.
London Economics was responsible for the polarisation report in 2000 which
recommended changes across the board to polarisation. CRA is now looking at
how the volumes of sales products are affected by commission levels – a
move that appears to stray into the Sandler review's territory.
Davis described the second stage of looking at polarisation as the FSA's
second bite at the cherry and that no further change is an option.
He hinted that the FSA would publish its phase two research in September
with a discussion or consultation paper before Christmas and a full debate
in the new year.
Severn says: “If we knew today that polarisation was done for, we would
not be hanging around until the end of the year to release a consultation
“Firms could be left at a disadvantage if the outcome they choose is not
the correct one. Things might turn out totally different from people's