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Severn says IFAs can challenge the big banks

The FSA thinks that few direct salesforces will become multi-tied but says IFAs who choose to split their businesses could mount a challenge to high-street banks.

Speaking at the Money Marketing Top 100 Summit last week in Croydon, FSA head of retail projects David Severn said he did not believe that many current tied players would act to take advantage of the changes to the distribution regime.

He said while they may choose to fill gaps or replace existing products with better ones, they are unlikely to become multi-tied because of the training and competence and supervision costs that would be involved.

But he said IFA businesses could mount a challenge to tied sectors if they split their businesses and set up a multi-tied operation serving the needs of the lower end of the market.

Severn said: “I am not so sure that this will be on a large scale in respect to the existing tied players. They might wish to gap-fill or replace existing products with better products. There will be some choice on the tied sector but not on a scale to threaten the IFA proposition.

“IFAs could mount a challenge for customers currently with high-street banks, offering not a fully independent offering but better than what they are getting now.”

Aifa director general Paul Smee says: “From the tied perspective, will they be able to exert the sufficient management controls to have multi-ties operate safely?”

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