Distribution of financial services products will be controlled by just half a dozen providers if the FSA pushes ahead with plans to scrap polarisation, warns Clerical Medical.
Speaking at a conference in London on How Changes to Polarisation Will Affect Your Business last week, Clerical head of strategic marketing David Shelton said the worst-case scenario is for providers with the deepest pockets to snap up the distribution channels through multi-ties.
Shelton said he supports calls from Skandia, as reported in Money Marketing, for a moratorium on any further changes until the political landscape becomes clearer.
The main perceived problem with the current regime, according to the London Economics report, is poor service delivered by direct salesforces.
Shelton says gap-filling allowed under phase one resolves this problem by allowing direct offices to offer a wider range.
But he is concerned the removal of polarisation entirely could become an “unmitigated disaster” leading to another misselling debacle.
He told the conference, the impact on the IFA sector from phase one is going to be less than people initially thought.
Shelton said: “It does not seem necessary for us to turn polarisation upside down for what could only be a very marginal gain. You could have the power right the way through from provider to distribution in the hands of a few companies. The worst-case scenario would be half a dozen major companies in control.”
An FSA spokeswoman says: “He is assuming that phase two will be total change of polarisation which is not a sure thing. There are a range of options on the table. His views are speculative.”