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Kirwan says regulate products, not advice

The UK should regulate financial services products rather than advice, says Scottish Widows protection marketing manager Nick Kirwan.

He says advisers have a tough time remaining compliant on largely personalised products and they get little support from the FSA, which often makes retrospective decisions.

Kirwan says product regulation is successful in other European countries and in other sectors such as food and sees no reason why it could not work for UK financial services.

Product regulation might mean a supplementary type of regulation, for example, advisers adding safeguards on specialist products such as high-risk investment products.

Kirwan says there would also be additional enforcement through corporate governance, with providers ensuring that the products are compliant and are benefiting consumers.

He says placing less onus on advisers and giving more provider support on the products they market would entice more people into the advice industry, ultimately giving consumers greater access to advice.

Kirwan says: “The number of advisers is dwindling fast. This is partly because the barriers to entry are quite high and with more advisers and therefore greater access, this system would bring great advantages. This would give advisers a significantly lighter touch but they would need to be responsible for implementing other safeguards on specialist products.”

He says he recognises that there is a counter-argument over product innovation.

Kirwan says: “I am not saying this would be Utopia. It might be seen as a barrier to innovation but currently it is hugely difficult for IFAs when they are up against decisions made with 20/20 hindsight.”

FSA spokesman Robin Gordon-Walker says: “We are not that sort of regulator and any movement in this direction would take a huge legislative overhaul. In Germany, this system has restricted the market and we would be wary of that happening here.”

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