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Regulator facing legal battle on RDR

Cazalet Consulting principal Ned Cazalet believes that the FSA will face tough regulatory and legal barriers if it tries to carry through its planned differentiation between sales and advice.

As part of his latest report into the life and pension market, published this week, Cazalet says the split is well intentioned but could create consumer confusion and legal disagreements over the use of the word “advice”.

He says the FSA should have given more focus to issues such as churning and the sustainability of business models rather than multi-ties.

The report criticises the FSA for not doing enough work on what consumers understand and the industry means by advice and sales and whether the regulator’s plan would be compatible with European law.

Cazalet says: “The question is whether the FSA’s plan to neatly separate advice from sales and assert that if advice is given outside of a whole of market context it is actually not advice, regardless of the plain and ordinary meaning of the word, is capable of being implemented.”

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