Aifa is calling on the FSA to look more closely into non-advised sales as it says consumers are confused over what constitutes advice.
The trade body’s second retail distribution review issues paper paper says: “This is a growing market in which we are seeing increasing problems and a misunderstanding over the nature of service received.”
Aifa says consumers are often confused over whether they have received advice or merely information, particularly where they have had face-to-face or telephone discussions.
The paper says: “Any restructure or rebranding of advisory services must deliver absolute clarity over whether it constitutes advice in the regulatory sense and where the responsibility for the purchase of a financial product lies.”
Lifesearch head of protection strategy Kevin Carr says: “Aifa is challenging the FSA to put non-advice on the RDR agenda. I do not think it wanted to rock the boat before because it has advised and non-advised members but it seems the FSA is forcing it to.”
In its Newicob consultation paper published in June, the FSA proposes that companies provide consumers with “sufficient information to make an informed decision” when buying protection. It also proposes that if a non-advised sale has an oral element, the seller must explain the customer’s responsibility. This means customers must be informed they have no redress to the ombudsman concerning any subsequent issues around suitability.
The FSA has not explained how Newicob fits with the RDR.