In its interim report, published this week, the FSA calls for a clear separation between whole of market advice and sales. As part of this move, the FSA says multi-ties could be prohibited from using the advice label and would have to convert to a non-advised sales service or the FSA would have to create a new “simple products” regulatory sales regime. It considers that the prohibitive option may be easiest for consumers to understand.
Other options would be for them to operate under a label such as “sales with persuasion”, although it says this would add complexity, or allow them to use the adviser label, which the FSA warns would compromise simplicity.
St James’s Place, which operates a model which would fall outside advice, is furious with the report.
Chairman Mike Wilson says: “I do not think for a moment that this will see the light of day. It is incredible to suggest that our advisers are just salespeople and that anyone who sells products from the wider market is giving advice.”
Other firms likely to be affected include Openwork, Intrinsic, Barclays, Vision Network and Sesame.
The British Bankers’ Association has attacked the report, warning it could limit consumer access to advice, but Aifa has dismissed these concerns.
Director general Chris Cummings says he is delighted the FSA refused to be influenced by banks’ vested interests to push through a sales-driven ment-ality that would have damaged consumer protection.
True Potential managing partner David Harrison says: “It is good to see the FSA recognising that independent financial advice is the only type of advice worth having.”
FSA head of the RDR Amanda Bowe says: “There is a lot more thinking and a lot more decision-making to do before we say whether we can make a split between advice and sales happen.”
The report also suggests that the FSA would continue its work into whether it needs to restrict providers from taking financial interests in adviser firms, with a potential to look at reintroducing “better than best” controls.
Its about time too. Let’s be honest. If your primary aim when arriving at work is to hit a sales target then you work in sales. It doesn’t matter if its photocopiers, luxury cars or unit trusts. You still work in sales. If your primary aim when arriving at work is giving advice then you are an adviser. It doesn’t matter if its health, wealth or happiness. You give your opinion thats advice.
As for multi-ties, I do feel a little sympathy but why be one? If you think you give great advice to your clients as a multi tie then by accessing the whole of the market for possible better financial products your client proposition would be better. Or are you just sales?
Simpson Financial Services
The problem with the new FSA approach is that many IFAs are also primarily selling products rather than advice. And many tied advisers are giving very good advice backed by significant corporate resource.
You can’t just assume that because people call themselves advisers, they are advising – the FSA have ruled out that simplistic approach for the tied people so they cannot logically argue that the IFAs are advisers just because they say they are.
‘Independence’ is about range of products available rather than ‘advice’ so it does not tell you whether someone is an adviser, only that they are a ‘broker’. Belonging to a professional body and passing more difficult exams do not tell you either. So what the FSA need to do if they wish to go this route is to define ‘advice’ and ‘sales’ and then see who is doing each activity.
Why don’t the FSA just repolarise the market place and just be done with it. Multi tie has done nothing more than confuse the general public anyway. So much for being Clear Fair and not misleading!!
The Pension Consultancy
About time that it was recognised the Independent means advice; however it is important that the independent sector realises that they must up their game! I include myself in that.
At last some sense. It is incredible to think that a salesperson offering just a single company or a few companies products can be called an adviser in the same vane as an independent, whole of market adviser is also called an adviser.
Tied agents and multi-ties are exactly that, they are tied selling agents. No ifs, no buts, they are restricted in what they can talk about. They are a sales agent by contract to one or two companies and cannot possibly offer unbiased advice. If they cannot offer unbiased advice, they should not be called advisers. They are tied sales agents and should be labled as such.
No prizes for guessing who will moan about this, all those operations who have a vested interest in ‘easy’ selling to the unsuspecting public and not proper advising.