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No distinction between agents, says Severn

Polarisation does not make clear that IFAs operate as an agent acting in the best interests of clients, according to head of the FSA polarisation review David Severn.

Answering questions from IFAs in this week&#39s Money

Marketing, Severn said the current regime does not make a distinction between an agent of the provider and an agent of the client. Severn said this lack of clarity is heightened by the fact that IFAs are generally paid by providers, which has led to consumers believing commission bias exists.

The question, from an IFA who did not want to be named, asked Severn how the proposals to scrap polarisation will benefit consumers because the regime makes a clear distinction between a company&#39s agent and a client&#39s agent.

Severn replied: “Actually, polarisation does not make a clear distinction between the agent of a product provider and the agent of the consumer. When an IFA sells a packaged product, a complicated web of agencies is created between the IFA, client and product provider which the regulatory regime has to cut through.

“But regulation has not changed the fact that when the IFA acts as the agent of the consumer, he is paid by the product provider. Consumers do not find this satisfactory and believe commission bias exists.”

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