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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


distribution.


Although hardly a surprise, both IFA Promotion and the Institute of


Financial Planning have out in favour of full polarisation in their


submissions.


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


Bill.”


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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