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OFT upholds Aifa’s Menu complaint

The Office of Fair Trading has upheld Aifa’s complaint that market average commission rates included in the menu are wrong but says it will not be taking action against the FSA.
Aifa complained to the OFT in April 2005, arguing market average commission rates included in the menu were having an anti-competitive effect on the market averages for independent advice as they were skewed by including both advised and non-advised business.
The OFT says it put Aifa’s concerns to the FSA and reported to Aifa that the FSA’s findings supported the trade body’s contention that the market average for CIS included in the menu was incorrect.
The OFT concluded it expects the FSA to “act on its findings to ensure that the market average for Collective Investment Schemes is as accurate as possible and that validation checks are as rigorous as possible going forward”.
But the OFT says it will not be taking action against the regulator as it has taken into account the fact the FSA is addressing the issues Aifa raised in the complaint and says there is ‘”insufficient evidence” of significant adverse effect on competition.
The FSA will be revising the wording of its questionnaire to minimise the chances of firms providing incorrect information and introducing new checks to improve the quality assurance of data that it receives.
Aifa director general Chris Cummings says: “The Menu has introduced for the first time a level playing field on the disclosure of charges. We firmly believe that the introduction of this document has been a major step forward towards greater transparency in the financial services industry.
“However, we also believe that the FSA has over engineered what was originally intended to be a straightforward guide for consumers. Some aspects of the Menu need to be reviewed but we remain fully in support of its retention.”

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