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Official: Davies confirms polarisation is to be axed

The FSA has confirmed it will proceed with its plans for depolarisation which will see the creation of multities and gap-filling and the scrapping of the better than best rule.

In a speech at the annual Aifa dinner in London last week, FSA chairman Sir Howard Davies said the regulator will press ahead with its plans outlined in CP121 in January.

The only change is that the defined-payment system will be dropped in favour of the menu-based system for remuneration of IFAs which was proposed by Aifa. The rules for appointed representatives stating they must have only one principal and only sell products decided by that firm will continue.

Reacting to the news, IFAs have repeated their concerns about allowing tied agents greater freedom to sell other providers&#39 products.

Providers say that until they see further details, it will be difficult to predict how the changes will affect their business.

Draft rules for everything but the menu system will be published in January, with a separate consultation on the rules for the menu coming shortly after.

All the changes will then be implemented at the same time in the latter half of next year or early in 2004.

Scottish Widows intermediary and partnership director Robert Wyllie says: “This is largely confirmation of what was expected but we still need to see the practical details before we know how it will affect our business.”

M&P Insurance Consul-tants proprietor Mukesh Chhatralia says: “What worries me is that tied agents will be able to multi-tie which will cause confusion among clients who will think they will be able to buy any products from them.”

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