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Severn in firing line over tied and IFA agent claim

IFAs have expressed outrage at FSA head of polarisation review David Severn&#39s suggestion that there is no difference between them and direct salespeople.

The row follows a question posed by an IFA to Severn in last week&#39s Money Marketing in which the adviser asked how the proposed changes to polarisation will benefit consumers when they blur the distinction between an IFA and a tied agent.

Severn replied that under polarisation, no such distinction exists but rather a complicated web of agency agreements which confuse consumers.

IFAs have criticised Severn, claiming this response clearly demonstrates that the regulator does not understand the polarisation regime.

They say it is worrying that the man heading the review does not believe there is anything setting an IFA acting for the consumer apart from a tied agent acting for a provider.

IFAs claim there may be nothing in black and white stating they are a client&#39s agent but in practice every IFA operates in this fashion.

Severn said: “Polarisation does not make a clear distinction between the agent of a provider and the agent of the consumer. When an IFA sells a packaged product, a complicated web of agencies is created between the IFA, client and provider which the regulatory regime has to cut through.”

Pensions & Investment Management principal Phil Moore says: “All IFAs operate on a best advice basis. I cannot understand where he is coming from. It smacks of someone being incredibly pedantic just to win an argument. I think Severn is being completely unfair with his comment.”

Informed Choice managing director Nick Bamford says: “It is common law which says I act as an agent of the consumer. English law tells me I have to do so. I am an Englishman, I believe in English law. Does the FSA think it can fly in the face of common law? Of course I always act for the client. It offends me to suggest otherwise.”

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