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's 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.”