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‘Tied advice could lead to increase in misselling claims’

Advisers are warning that attempts by the Association of British Insurers to undermine the sales/advice split outlined in the retail distribution review could result in increased levels of misselling.

In the ABI’s response to the RDR interim report, it says multi-tied and tied advisers should be able to use the advi- ser label.

The ABI says: “All suitably professional and transpar- ently remunerated advisers should be allowed to provide advice and give product recommendations, not just those who offer products from the whole market. We must not risk reducing consumer access to high quality advice by restricting its supply.”

Paladin Financial Services managing director Tim Purdon says going down this road will increase misselling cases.

Purdon says: “IFAs are always working on behalf of the client, whereas tied and multi-tied are working on behalf of the company. If a product is underperforming, a consumer could look at what they were sold and realise they were not given a full choice of investments.”

Aifa says tied and multi-tied firms should fall under the sales banner and is urging the FSA to create a sales sector that features sales with and without persuasion.

Director general Chris Cummings says multi-tied and tied agents should operate under the sales with persuasion channel, with QCA level 4 qualifications and remuneration policies based on customer agreed remuneration.

Norwich Union director of distribution development Stephen Gay says the definition of advice should not be linked to whether or not the offering is from the whole of market. He says: “Everyone, including the FSA, is saying that we need to separate advice and sales. So why would you define advice by what people can sell?”

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