The FSA's decision to allow different meanings of the term independent for insurance and investment intermediaries has been slam-med by the Financial Services Consumer Panel.
As things stand, investment advisers who call themselves independent must offer whole-of-market propositions whereas the FSA will allow unrestricted use of the term independent in the general insurance market as long as it complies with the clear fair and not misleading rule.
Chairwoman Ann Foster believes having two meanings will lead to confusion among consumers and cynicism over whether IFAs are truly independent if insurance intermediaries do not have to be.
The FSCP's annual report published this week also calls on the FSA to use mystery shopping more frequently, particularly in the area of self-certification mortgages where it believes the FSA has accepted industry assurances too easily that lenders have adequate systems in place to spot fraudulent claims.
The panel says history should have taught the FSA not to trust the industry too much, pointing to the way the FSA has handled precipice bonds and the use of past performance figures in advertising material as well as the self-cert issue.
Regarding Sandler, the FSCP is disappointed that the FSA has not found a way to test the extent to which the filtered questions would control the risks of misselling where the consumer is subject to pressure from a salesperson focused on achieving sales targets.
Foster says: “If consumers are to understand the service they are receiving, then coherence is required. To have two different meanings for one word is crazy and will be totally confusing for consumers.
“If a consumer can go to a general insurance intermediary who says he is independent when he isn't,people will become cynical about whether IFAs are really independent.”