When we responded to the latest review of polarisation, we did so in line
with the FSA's stated objective instead of simply defending the status quo
because of changes afoot in the market, particularly the rapid move to
An open debate is necessary if the logistical problems which multi-ties
would bring – for example, what happens to the client when one or more
multi-ties finish? – are to be exposed to the widest poss ible audience.
Currently, many providers rebadge other companies' products or use
This process, known as white labelling, allows providers to have a full
range of products where they have gaps at present, such as PHI. As white
labelling is currently available, there is no need to introduce multi-ties.
To allow multi-ties where someone could market five or six companies'
products and display all those brands would lead the consumer to assume
that someone was independent when they were not.
We therefore proposed that white labelling gives that access to a full
range of products and multi-ties are unnecessary.
But there is a lack of open debate, which is unfortunate and does nothing
to bring us close to the common goal of clarity for the consumer.
The other key points in our response concerned commission rebates and titles.
The former is where the Office of Fair Trading pointed to the potential
for bias where commission was negotiated at the same time as evaluat ing
the competitiveness or otherwise of individual provid ers' contracts.
If commission were added to plans after the evaluation, no bias would
exist and, as professional financial advi sers continue to evolve the
transparency of advice costs, would aid the development of the profession.
These “clean contracts”, which we fully support, would not prevent any
adviser from taking the same level of commission as at pres ent from the
plan but there would be no cross-subsidy from elsewhere.
Cross-subsidy is where the full effect of the rebated commission is
reduced by higher commission paid on that product to other advisers.
The latter point was on titles. While people are able to display nearly 30
letters after their name on passing the “driving test” for advising on
financial services, we will not be able to establish a profession with
We need titles that mean something. Titles should differentiate between
independents and others in a manner which is understood by the public and
not just us.
We need to take our lead from a much run advert which says: “It does
exactly what is says on the tin.” This level of clarity in titles is not
just preferable, it is essential.
Sofa is firmly behind the objective of this review, namely, “to deliver
the best deal to consumers in terms of choice, value for money and dynamic
competition benefits”. Multi-ties does not move us to this objective but
then neither does the status quo.
We need a stricter regime of polarisation with the changes we have
suggested. If the objective is to be met, the present system is not up to