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Sandler could help more IFAs keep independence

Ron Sandler&#39s proposals for the future of the independent sector have been met with gratitude from IFAs who have concluded he has made it easier for advisers to remain independent.
Sandler&#39s report published this week proposes a “substantial relaxation” of the FSA&#39s Defined Payment System by removing providers from influencing how much and how IFAs are remunerated and allowing several different methods of payment.
Unlike the FSA&#39s DPS proposals, Sandler&#39s reforms will allow a sale contingent fee option removing the pressure on consumers to write a cheque as they walk in an IFAs door.
Payment options include upfront payments, hourly fees, instalments, a percentage of the initial investment similar to commission or a percentage of the funds under management like trail.
Only advisers fitting the DP model will be called an adviser, while others will be forced to choose another label such as “product distributor” although they would be allowed to continue to receive commission.
Sandler says his reforms tackle an industry in which consumers are unempowered, advisers have no incentive to act in their clients best interests and providers have too much control over remuneration.
But the FSA says Sandler&#39s proposals will not be given “anymore weight than anyone else who responded to CP121” according to spokesman Rob McIvor.
Sandler told Money Marketing: “It is a substantial relaxation from CP121 which has no sales contingent payment for advice. The new system would not demonstrate any fundamental difference from what happens today. But the provider would have no say in how much the adviser gets paid.”
Syndaxi Financial Planning principle Robert Reid says: “If you are not really advising but only promoting a product then you should not call yourself an adviser. I think Sandler has sorted out the DPS for the FSA which must be a good thing.”

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