Independent advisers will need to offer unbiased, unrestricted advice and remuneration must be set by advisers with no influence from product providers.
The FSA says it wanted to scrap commission altogether, but legal barriers from the EU prevented it from doing so.
Instead, the FSA says: “By the end of 2012 any payment for advisory services made through the customer’s product or investment must be funded directly by a matching deduction from that product or investment made at the same time as that payment.”
The sales advice channel will cater for those offering restricted advice, including tied agents, guided sales and execution only models.
The FSA says it will consult further on how to implement the changes and make them clear to consumers.
The FSA also will introduce an overarching Independent Professional Standards Board, which will be established as soon as possible as a sub-committee of the FSA Board.
The papers states: “After a period, the IPSB may then seek its own statutory powers and become fully independent, outside of the FSA. At this point, if it is within the IPSB’s legal powers, the IPSB should require all PFAs to have a relationship with it through a professional body.”