The Sandler review has questioned the fundamental structure of the IFA market in the UK in a consultation document published today.
The document, a review of medium and long term retail savings, will form the basis for the Sandler review, conducted by former Lloyds of London chief executive Ron Sandler.
The document poses a series of questions including asking why some providers feel the need to pay more commission on similar products than others.
It asks the question whether there is a regulatory case for the setting of fee and commission levels.
It also argues there is a serious risk posed by the lack of consumer knowledge of investment products. It suggests this lack of consumer input into the market means the interests of advisers and their clients may not coincide and at very least require very detailed policing.
It also asks why there is no market for advice itself in the UK and why on the whole advice is tied in with products.
The document says it has been told by unnamed parties that advisers concentrate on issues of product design such as the tax treatment rather than on the underlying investment strategy and questions their investment knowledge and knowledge of investment strategy.
It also says it has been told that advisers may be overly reliant on past performance when selecting products.
Sandler says the report will seek to build on the work of the FSA in the area of with-profits and on the polarisation review although it directs any submissions on the latter to be passed to the regulator.
The review will also assess the effectiveness of product regulation such as Kitemarked stakeholder and Cat marked Isas.
It will also examine what role banks may play in the market and why they have not established a dominant position as many have predicted.
It also plans to look at the possible influence of new channels.