In its response to the RDR, Scottish Widows says the FSA’s proposed ban on factoring will reduce consumers’ opportunity to receive advice on long-term savings.
It says as a compromise to factoring the cost of advice should be recouped over a maximum of five years.
Head of retail distribution development Robert Kerr says he is also concerned that the proposals will drive advice upmarket and will leave mass market consumers un-served.
Kerr says: “Our research reveals that 54 per cent of consumers said that paying a fee for advice would make them less willing to seek advice and of these, 84 per cent said they would look for an alternative or make their own arrangements rather than pay a charge to an adviser.
“The FSA’s current proposals could therefore have the unintended consequence of disenfranchising those people who need assistance the most.”
Kerr says it is critical that the FSA develops other advice models, such as simplified advice, to serve the mass market.
He says: “We believe that simplified advice could be used to extend access to consumers for savings, investment and protection products.”
Scottish Widows supports the FSA’s pursuit of a step change in professional standards, saying it is an essential component to help restore consumer trust, deliver improved outcomes and attract new talent into the industry.
Kerr adds: “We believe it both appropriate and timely that the FSA undertakes this review as it is essential that customer confidence in retail financial services is improved.
“However, great consideration and care is required to appropriately determine its implementation and what should be within the scope of the RDR. If the RDR results in a marked contraction in advisory capacity and fewer consumers receive advice, the RDR can not be considered to have achieved its objectives.”