More and more players are lining up behind Aifa to defend polarisation in
their submissions to the FSA consultation.
The Prudential group has backed the full status quo while pointing out
that, with Prudential, Scottish Amicable, fund manager M&G and direct
online provider Egg, it covers the full range of financial services
Although hardly a surprise, both IFA Promotion and the Institute of
Financial Planning have out in favour of full polarisation in their
But the support comes as the Government reveals that the decision on
polarisation may be delayed by a further review in the form of a
Competition Commission investigation. This would dash hopes that an early
decision could be made. The FSA consultation was meant to be finished in
time for the summer.
Scottish Amicable chief executive Roy Nicolson said in a statement of the
Prudential's submission: “The continuation of a clear distinction between
the role of an IFA and tied advisers for all product ranges is the best
means of maintaining a strong independent sector.”
It adds: “Given that these businesses cover the polarisation spectrum,
Prudential is particularly well placed to comment on the effects of the
IFP's submission suggests going beyond the remit of the current review and
is writing to the FSA outside the consultation process to demand that
advice be completely separated from the selling of any products. It
believes the only way this can be achieved is by IFAs giving advice in
exchange for fees rather than commission.
IFP chief executive Nick Cann says: “No amount of decision trees can
replace the need for quality advice but if it is commission based it gets
mixed up with selling. In the polarisation debate we must not lose sight of
the main issue for clients, which is that they are ensured the comfort of
Treasury head of financial services Paula Diggle has indicated
polarisation could be referred to the Competition Commission, formerly the
Monopolies and Mergers Commission, after the Treasury receives the FSA's
recommendations on the subject later this year.
The current regime has already been scrutinised by the OFT which is
generally perceived to have produced a flawed report, which recommended
multi-ties for investment products while main- taining polarisation for
A Treasury spokesman says: “Referral to the commission is one of several
options. What we do depends in part on the Financial Services and Markets
The other options are the Chancellor simply accepting whatever the FSA
recommends or the Treasury making up its own mind.
Diggle was speaking at a closed conference on polarisation last Wednesday
where she gave no indication of whether she favoured the status quo or
multi-ties. At past conferences, she outlined worries about the
inflexibility of the tied sector, because it might prove to be an obstacle
to transfers between stakeholder providers.
Most other speakers at the conference have backed polarisation in its
existing form and according to delegates there was far less support for
multi-ties than they had expected.
Aifa director general Paul Smee, who attended the conference, says:
“Nobody really sat down and made a case for multi-ties. The conference also
brought home to me the cost of change. You cannot just wake up in a
DBS spokeswoman Sue Lewis, also at the conference, says: “There appeared
to be a lot of support for polarisation.”