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Sacrifice to stakeholder

When we made our submissions to the OFT and the FSA we did so in the certain belief that change was inevitable and the key driver was not the much touted comment of anti-competitive practices but the need for stakeholder to be a success.

It is clear that the IFA will only survive the inevitable removal of polarisation if they can be seen to offer a truly professional service. This means that IFAs will need to develop a marketing strategy as they will no longer be in a position to market on the back of the clear distinction that polarisation provided.

Part of that change in approach has to be a move towards a more transparent remuneration strategy where the cost of advice is clear and the tasks required for the advice to be dispensed are itemised. The latter will ensure that the purchase of the product is put firmly in perspective in the advice process. If we are to promote the value of professional advice we need to ensure that the public understands exactly what it comprises.

The conclusions reached in Howard Davies&#39 letter to the Treasury seem to reinforce our view that the need for change is not from a consumer&#39s perspective but from a wish to ensure the success of stakeholder. It remains to be seen whether the consultation process will enable the significant amendment of these proposals or if the timetable makes this more of an information process than a detailed round of consultation.

Whether all providers will rush to offer multi-ties is by no means clear, especially in regard to the issues it raises for the dilution of their brand, or will the brand of the multi-tied agent become the norm, with providers regrouping into manufacturers and distributors. It is hard to see all providers wishing to be both.

From our perspective, the new dangers which exist are twofold. First, the consumer will need to have the benefit of a much more robust system of status disclosure to ensure they know who the adviser represents and what will happen if and when the tied agents alter their ties to a new selection of companies for clients who need ongoing advice. The other concern we have is that product purchase is the only time when multi-tied agents may be willing to offer advice for “free”. In addition, we feel that relying on Catmarking fails to recognise that, although the Isa itself may be of good quality, its suitability for that particular client may be negligible.

Another aspect which should not be overlooked is the blight this will place on those IFAs firms currently up for sale or those IFAs wishing to sell their firm in the short term. IFAs will need to be far more selective in the clients they service and this will lead to a dearth of advice for the very people who need it most.

Given that the prime duty of the FSA is consumer protection, we are surprised that it has chosen to make this key task so much more difficult for itself.

We intend to continue our policy of making submissions on this topic which look at the practicalities of continuing to provide a professional standard of advice for consumers.


Permanent – Critical Illness Mortgage

Wednesday, 15th November 2000.Type: Critical illness cover.Minimum premium: £10 per month.Maximum cover: No maximum.Illnesses covered: Cancer, heart attack, stroke, major organ transplant, multiple sclerosis, kidney failure, coronary artery bypass, alzheimers, angioplasty, aorta graft surgery, benign brain tumour, blindness, coma, Creutzfeld-Jakob disease, heart valve replacement or repair, HIV &#45 blood transfusion, HIV &#45 needlestick injury, loss […]



My life has totally chan ged in six months,” says Mark Wilkins, the 39-year-old consultant and former IFA who finds himself on the inside track of BSkyB’ master plan to launch a multimedia broadcast service to IFAs.The multi-million-pound venture, branded The Fin an cial Channel, aims to offer a platform for product providers to communicate […]


In an unofficial survey of IFA practices owned by accoun tants, where clients have no alternative except to pay fees for accountancy services, fewer than 20 per cent of those same clients chose to pay fees for financial services advice when a commission alternative was available. That seems to suggest an overwhelming vote by the […]

Charge of the enlightened brigade

Are stakeholder pensions the thin end of the wedge for IFA businesses? Certainly, the indications are that reduced commi ssion levels on pensions will lead to reductions on other financial products. This could certainly lead to the demise of IFAs if they are not willing to change.The majority of IFAs rely on commission from product […]


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