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Powerful Pru backs fight for polarisation

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&#39s 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

polarisation rules.”

IFP&#39s 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

independent advice.”

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&#39s

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

pension products.

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

depolarised world.”

DBS spokeswoman Sue Lewis, also at the conference, says: “There appeared

to be a lot of support for polarisation.”


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