Aifa believes the FSA’s admission that primary advice will lead to “sub-optimal” recommendations means that the regulator is willing to “sanction consumer detriment” in a bid to close the savings gap.
Director general Chris Cummings says the proposal for a primary advice channel, put forward in the retail distribution review, is an area of concern for Aifa.
Cummings says that while he can understand the FSA and the Treasury looking for a radical solution to help close the savings gap for political reasons, he believes that primary advice will further damage the reputation of the industry and push consumers away from retail financial services.
Aifa proposes using generic advice to help consumers identify their needs.
Consumers would be given a list of organisations, including IFAs, banks and providers, which they could go to for focused advice on a partic-ular need.
Cummings says this reduces costs but ensures that the consumer gets the appropriate individual tailored service and the full protection of the Financial Ombudsman Service.
He says: “When the FSA suggests that primary advice will lead to sub-optimal outputs for consumers, that is consumer detriment. That is a regulator willing to sanction consumer detriment.”