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Skandia wants tied change

Skandia is calling on the FSA to focus on reforming the tied sector – where it believes consumer choice is unreasonably limited – but to adopt a lighter touch for IFAs, as part of its response to CP121.

It is proposing a simplified regime with status disclosure and terms of business being replaced by a “needs-based” disclosure.

This would be a simple one-page document detailing product areas and whether the adviser is making recommendations from a single company, a range of comp-anies or across the market.

It would also detail the remuneration method and be signed by adviser and client.

Skandia suggests the FSA take a step-by-step approach to change. It suggests that the most fundamental distortion to the market comes not from distribution channels but from “the deficiencies of reductions in yield as a measure of price”.

Skandia managing director Nick Poyntz-Wright says: “If the FSA is adamant that IFAs must solely be fee-earning then we anticipate a massive move to the new middleground AFA status. We expect that as many as 90 per cent of IFAs will opt for this if the FSA is intransigent on this point.”

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