Royal London is warning the FCA needs to scrutinise the growing number of providers who also own advice firms.
Chief executive Phil Loney says consumers are in danger of losing out from the “return of the direct sales model”.
Standard Life’s new adviser consolidator 1825 has snapped up several independent advisers over the past few months.
Loney says: “If you look at the data then this kind of controlled advice sector is growing really fast. That’s a real concern, I’m hoping when Andrew Bailey comes in to the FCA this sort of model – which is based on reducing competition in the market – looks at it. I doubt it is really in the interests of the consumer.”
He adds: “I understand how that works for firms like Standard Life, but I’m not sure how it works for the market. An impartial adviser makes a recommendation and finds you best products in the market. Advisers owned by providers will do the first of those things, but not the second, because they are working off a very restricted panel.”
Loney says the regulator needs to step in to protect consumers from fundamental conflicts of interest.
He says: “You can bet your bottom dollar Standard Life products will be on those panels. It raises a real conflict of interest issue and our concern is this looks an awful lot like a return of the direct sales model. I’d like the regulator get hold of this and call it something different, like partial advice.
“Over time, shareholders are going to want more margin – so is advice going to get more expensive? There are cost benefits from vertically integrating but my worry is they will flow to shareholders and consumers will find they get a less than wholesome service at an increasing price.”