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LibDems want product firms to fund &#39free&#39 advice by IFAs

The Government and product providers should shoulder the cost of independent financial advice, replacing commission as the primary way of remunerating advisers, say the Liberal Democrats The idea, proposed by LibDem trade and industry spokesman Vincent Cable, would allow consumers to be confident the advice they get is truly independent and would not involve commission arrangements, he says.

The scheme has had the endorsement of the LibDem hierarchy, with Shadow Chan-cellor Matthew Taylor saying the idea has merits.

Speaking to Money Marketing at the LibDem Party conference in Bournemouth on Tuesday, Cable said the industry should be encouraged to contribute on a voluntary basis but the Government should not rule out compulsion if they refuse.

Despite the steep costs the scheme would involve, Cable says it is a small price to pay to re-establish consumer confidence in the industry.

He says providers unwilling to go along with the scheme would be acting in a “incred-ibly short-sighted manner”.

Consumers could still expect to pay a nominal fee for the advice they receive but, under Cable&#39s plan, the majority of costs would be met by the industry and the Government.

Cable says: “There is an argument for the industry to wholly fund independent advice. Once consumers are confident that their advisers are genuinely independent, then they can begin to take informed decisions.

“A wholly independent advisory system backed by the industry and perhaps the Government would be a relatively small investment to get a lot of public confidence.”

Taylor says: “We need to look seriously at ways we can improve the availability of independent financial advice and this suggestion is one positive way of addressing that.”

Aifa director general Paul Smee says: “I think this is a very interesting concept but the detail would take some working out.”


Aberdeen Murray Johnston Private Equity – Aberdeen Growth Opportunities VCT

Tuesday, 25 September 2001.Aim: Growth by investing in smaller unquoted companies in the UK.Minimum investment: £3,000.Opening-closing date: September 27, 2001-April 5, 2002.Charges: Annual 2 per cent for the first year, 2.5 per cent thereafter.Commission: Initial 3 per cent, renewal 0.5 per cent for investments £500,000 or above.Tel: 0845 3002830.

Outside edge

As I finish the final draft of my “Dear Ron” letter it becomes clear that the status quo is no longer an option. Scottish Amicable abandoning commission on regular-premium business simply acknowledges the fact that a far more commercial world is well on the way for those of us who wish to remain as IFAs. […]

Flight hits out at &#39anti-IFA&#39 stance in review

Shadow Economic Secretary Howard Flight says Ron Sandler&#39s review of the retail savings market proves the Establishment is anti-IFA. Speaking at last week&#39s Institute of Financial Planning Conference in Coventry, Flight slammed the review, saying: “I was shocked the Sandler consultation document contained outrageous Establishment anti-IFA bias.” He accused the review of being “shallow in […]

GISC appeals against commission ruling

The General Insurance Standards Council is appealing against last week&#39s decision by the Competition Commission that its proposed rule forcing intermediaries to join up breaches the Competition Act. The GISC board is asking the Director General of Fair Trading to exempt it from the Act. It will seek the support of the Government and consumer […]


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