As we await the FSA papers containing the information required to scope the full range of distribution choices, specifically simplified advice, many distributors of financial products, including the aggregators, banks and IFAs, are yet to decide what distribution and advice options they will offer after 2012.
Banks and insurers eagerly await the simplified advice option as the FSA has indicated that advisers operating in this environment will not need QCF level four qualifications.
It is estimated that around 30 million people in the UK will not be able to afford fees and will receive no advice from IFAs or restricted advisers. As a result, the simplified advice and general guidance such as that offered by the Money Advice Service will be welcomed by the majority of the population.
For the wealthy, it is a different story. In June, Skandia surveyed 500 UK millionaires who said they are five times more likely to take advice from an IFA than a tied adviser, with only 10 per cent seeking advice from a tied adviser linked to a life company or insurance company.
Common sense, backed up by research, leads me to believe there is a place for independent, fee-charging, highly qualified advisers, restricted advisers for those with smaller amounts of money and simplified advice for millions of consumers with straightforward financial needs. After all, simplified advice is better than none at all.
The FSA recently answered questions on aspects of the RDR many of us were unclear about. Some of the answers were blatantly obvious, such as those who are not qualified to QCF level four can still conduct a fact-find, products that are too high-risk for some clients may be appropriate for others and that charges should reflect the service provided, which has always applied to service-led businesses.
My concerns are that the FSA will not be able to list on its register who is independent and who is restricted, or identify the firms that offer more than one status choice for consumers.
Alongside the FSA’s weakening of the independent brand, some commentators, including some high-profile IFAs, have recently derided the IFA acronym and Unbiased.co.uk/IFA Promotion’s blue roundel, a kitemark of quality seen in thousands of office windows around the UK.
If independent advice, which is the gold standard of financial advice, is not communicated to the public, this will not be treating customers fairly as they will be confused about which type of adviser they can choose to see.
Commentators must keep the consumer in mind when criticising the same things that have created considerable businesses and income for many of them over the years. Most people are already confused enough about where to go for financial advice without reading in the press that it is about to get more complex – and that what is available now is not very good.
Kim North is managing director of Technology & Technical