The FSA’s retail distribution review says provider firms will not be able to advance finance to advisers out of their own funds.
Aviva director of distribution development Stephen Gay says it is the regulator’s responsibility to make the case for a ban. He says: “The industry believes that it is up to them to prove why factoring should be allowed to continue but I think it is the other way round. The FSA should prove why there is reason to remove it and I do not think it has done that yet. You cannot sleepwalk into something that has not been proven. The FSA has to do more to prove its case, espec- ially in the current climate.”
Aegon head of corporate affairs Francis McGee says he intends to continue campaigning for factoring to be allowed.
He says: “How do you enable somebody to start regular saving at £100 a month if they have to pay an initial advice charge of £500? The industry is moving away from nil-allocation periods, so how do you enable consumers to pay for that?
“Factoring has always been the thing that enables this. The case has not been made for stopping factoring in its tracks. Regular saving is a billion pound market every year. I do not regard the argument as being won or lost, there is more ground to cover.”
An FSA spokesman says: “Adviser charging is about removing bias. If providers were allowed to advance their own funds to adv- isers, it would allow bias back into the system.”