The Treasury has taken its toughest line yet against advice with a letter to Conservative MP John Randall from economic secretary Melanie Johnson saying stakeholder does not need advice.
It has provoked a furious response from the industry who warn there is a risk of widespread misbuying. The move comes as the Treasury is about to appoint a new managing director at the FSA directly responsible for IFAs.
The letter suggests stakeholder can be bought off the page without any advice.
The FSA's decision trees recommend investors to seek advice over stakeholder if they have doubts about the options.
In the letter, Johnson says financial advice is not a necessary condition for all savings products.
The letter says: “Catmarked products and stakeholder are products whose standards mean investors should be able to get a good deal without needing to pay for financial advice.”
ABI media manager Vic Rance says: “All financial products benefit from advice but in a 1 per cent world it will be difficult to provide. A lot of people do not understand financial products. Even with the simplest products, it is helpful to see an adviser before a decision is reached.”
LIA director of public affairs John Ellis says: “This is another example of the misguided Treasury view that they can remove advice and everything will be okay.”
Norwest Consultants principal Harry Katz says: “She does not need advice because she knows what to do with her money but others are less fortunate.