Last week, the FSA finally released the results of its quality of advice mystery-shopping exercise to measure how financial advice firms of all sizes are embedding its treating customers fairly principles in their businesses.The results made grim reading for the IFA sector, indicating high levels of commission bias and a flagrant disregard for the best interest of the customer. According to the report, one-third of advisers that claim to be independent do not offer a genuine fee option while half of the firms that do offer fees actively discourage their customers from taking this option. As well as this, two-thirds of firms are failing to provide adequate explanations of risk to consumers. The FSA claims that less than a third of advisers from the 50 firms surveyed provided non-commission-earning advice such as recommending debt repayment before recommending other investment products. Almost all firms claimed to offer a full advice service but only a third undertook a full review of their customers’ needs and objectives. The FSA has warned that firms that fail to get their act together by March next year and show no progress in embedding the principles of TCF into their business will face enforcement action or other sanctions. But while the industry tried to absorb the implications of the findings, Cummings turned the attack on the regulator and refused to recognise the report. He believes the report crucially failed to distinguish between IFAs, whole of market firms, tied, multi-tied and bancassurers, members of networks and directly authorised firms. He says: “I am shocked and deeply disappointed at this blatantly biased research which is targeting IFAs when we know from conversations with the authors of the report that the main culprits are banks and single-tie firms. “This is lowest-common denominator tar-brushing of retail financial advisers which will mislead consumers. I am deeply worried by the message that the FSA is putting out about financial advisers.” Without saying it explicitly, Cummings also alluded to some form of witch-hunt against financial advisers on the part of the FSA. He highlighted the notable absence of IFAs from the various panels at the FSA’s recent retail intermediaries sector conference, which was remarked upon by many members of the IFA audience, as perhaps indicative of the regulator’s less than positive attitude towards the IFA sector. The FSA’s response to Cummings’ outburst was not unexpected, with a spokesman declining to discuss the criticism of its methodology. Another FSA spokesman, Dave Whitely, said the high-level nature of TCF principles means it would be wrong to compare the performance of multi-tied firms with IFAs as TCF principles apply differently to different categories of adviser. But when the report says, for example, that one-third of firms are failing to explain risk adequately to their clients, surely it would be helpful to know whether it is small IFAs or, as Cummings suggests, bancassurers and tied firms, that are the main culprits. We are not talking high-level principles here but unacceptable breaches of basic standards of advice. Cummings is by no means alone in questioning the validity of the FSA’s latest indictment of the IFA sector. The financial services practitioner panel has also weighed in, labelling the FSA’s mystery-shopping and thematic exercises as useless. It claims that the small sample sizes used by the regulator means there is precious little to glean from the findings despite the FSA placing such great emphasis on them. Informed Choice managing director Nick Bamford, despite agreeing with Cummings that the results should be more specifically assigned to categories of advice, is disappointed by the findings of the survey. He says: “It is very alarming that clients still do not appear to be getting independent advice and that advice is being driven by the level of commission to this extent. I thought we had moved on from the days of commission bias.” The report plays into the hands of the financial services consumer panel, which last month accused the advice sector of commission bias and set out plans for an alternative payment system to replace commission. Panel chairman Jon Howard says: “These results just reinforce our views and demonstrate the urgent need to reopen the debate over commission.” Personal Finance Society public affairs director John Ellis also believes the results raise “enormous questions about the future of commission” and will inevitably increase calls for the introduction of factory-gate pricing, where the cost of the advice is explained at the outset but factored into the price of the product rather than in an up-front fee.