Impact Plus principal consultant Guy van Koetsveld says a comprehensive list of multi-tie operators and their relationships with providers is required to ensure greater clarity in areas such as legal and commercial deals and the basis on which panels operate.He considers consumers should be given the information to understand the concepts of best of breed panels, sub-panels, fully competitive offerings or a mixture of concepts. He says the ability for a multi-tie to create multiple panels- for example by white labelling its technology, needs to be highlighted. These issues have also been picked up by Which? The consumer watchdog says warnings it gave in the run-up to depolarisation about the added complexity around the nature of advice were ignored by the FSA but are now in evidence. Which? principal policy adviser Mick McAteer says the regulator has yet to address the fact that consumers need to be made aware of the details behind these deals and the potential conflicts of interest that have been introduced to the market. McAteer says urgent work is needed in this area rather than waiting for the FSA depolarisation review in mid-2007. He calls for clear compliance reports, better detailing of commission levels and scrutiny of the way that panels are brought together through mystery-shopping-type exercises and other measures. He says “The FSA and multi-ties are hiding behind the excuse of commercial confidentiality but that is no excuse for keeping consumers in the dark.” But Standard Life managing director of sales Nathan Parnaby says there are too many practical barriers to the creation of a classification system or public list. He says issues of commercial confidentiality would be a high hurdle to get over but, more important, it would be too hard to quantify or define adviser/provider relationships. He says: “The issue is not just levels of commission but also all the other relationships that have developed between firms, such as offering people to help with marketing, use of technology, up-front or continual payments and sharing other resources. These would be very hard to explain in a simple manner.” Parnaby is sure that it is something the FSA will look at in its depolarisation review but hopes the regulator will form the view that multi-tie has been a benefit to consumers, enabling advisers to offer a better service because of the trimmed down choice. He also points out that market complexities are not confined to multi-tie relationships. FSA spokeswoman Sam Bennett says the regulator already has rules in place to guard against conflict of interest issues in drawing up multi-tie panels and points out that the regulator sent out a Dear CEO letter in 2004 to ensure firms were made aware that the regulator would be keeping an eye on issues around the selection processes for panels. She says the regulator does not believe it is an issue that is pressing enough to require the depolarisation review to be brought forward and adds that the current compliance and consumer information in key facts documents is sufficient. In a November speech to the Personal Finance Society conference, FSA managing director of regulatory services David Kenmir said the regulator is collecting information, including consumer attitudes to the new regime, which will inform the detailed assessment in June 2007, although he said that some outcomes will take longer to be seen. Falcon Group chief executive Allan Rosengren believes that consumers need to be fully aware that multi-tie panel selection involves more than simply offering the best providers for each product area but doubts that greater transparency will be brought to the market without heavy regulatory prodding. On this point, he doubts that the FSA has the appetite to address the issue to the extent that would fully inform consumers of all the underlying transactions affecting selection processes. He says if depolarisation was about opening the market up, greater transparency should have come hand in hand with this new regime. Rosengren, a staunch advocate of wholly independent advice, says this again shows the advantages of whole of market advice as the first port of call for consumers wanting to know exactly what they are getting into. “I doubt that we will ever get to the bottom of selection reasoning and restrictions on panels. Independent advice is the only place where consumers will know what they are getting into,” he says. Van Koetsveld hopes that his work will keep the debate in the public eye but doubts that there will be many more entrants in the multi-tie arena. He believes now is the time for firms providing multi-tie services to show increased transparency themselves or else be forced to by the FSA. He praises Barclay’s Select Choice multi-tie as an exception for going into more detail than most about the reasoning behind its selection process. “Increased transparency through offering consumers a better understanding of the reasons for panel selection, including details of legal and commercial deals in place, should be clutched by firms involved in this sort of advice as a way demystifying the process and proving to det-ractors that they are properly serving the consumers’ interests,” says Van Koetsveld.
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