A “basic advice plus” regime allowing commission payments and requiring QCF level three qualifications has been proposed by an industry group including representatives from the Association of British Insurers and Association of Mortgage Intermediaries.
The group, led by industry consultant Peter Williams (pictured) and also including staff from JP Morgan and Lloyds Banking Group, was commissioned by the annual Gleneagles industry conference in 2011 and presented its report at this year’s conference, which took place earlier this month.
The report calls for QCF level three advisers to offer basic protection products, cash and equity Isas, stakeholder pensions and advice on purchasing an annuity subject to the size of the pension fund. Advisers would be paid by commission and products would be designed by the industry and approved by the regulator.
The working group says the FSA’s insistence that advisers delivering simplified advice must be qualified to QCF level four is “educational overkill” which “prices out” the target market.
Williams says: “There is a massive advice gap opening up and we are trying to find a way to plug it. We totally support the idea of the RDR, but next year we will be in a position to ask whether a new structure is needed to cater to any identified gaps. We should be starting this debate now.”
Yellowtail Financial Planning managing director Dennis Hall says: “It is likely the Financial Conduct Authority will need to look at this and question why it is measuring all advisers by the same yardstick when clients’ needs are completely different.”