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Stand firm over advice, says Sifa

The FSA must stand firm and ensure that only whole-of-market advisers can use the advice tag, says Sifa.

It welcomes abandoning the professional financial planner category and clarification over the definition of independence.

But it queries how tied and multi-tied advisers will fit into the new regime.

Managing director Ian Muirhead says: “The FSA suggests either that a special exception should be made for hybrid advice/sales models – defeating the whole object of differentiating advice from sales – or that this model should be permitted to continue but not be described as advice. Otherwise, hybrids should be required to opt for either advice or sales status.”

He says the last option is a “cop out” because, as the public has no resonance with the word advice, it would be possible for firms such as St James’s Place to continue what they are doing without calling themselves advisers.

Muirhead says: “You cannot mix oil with water. These hybrid firms are essentially providers selling products – St James’s Place even said that its main competitor was Norwich Union. A firm that offers only a few providers’ products cannot be putting consumers first, no matter how expert its staff are. It is incompatible.”

Sifa also welcomes the FSA’s recognition that the bar for professionalism should not be set as high as chartered status.

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