The consultancy firm’s Tillinghast insurance consulting business says it is concerned that the desired “end state” industry structure envisaged in the RDR interim report contains significant flaws which will both inhibit the raising of standards and limit the availability of advice.
It claims the FSA’s emphasis on the requirement for advisers to select products from the range available across the market suggests that it regards advice as virtually equivalent to broking – the selection of products from among competing providers.
It says: “This is an out-of-date and incomplete view. We believe that choosing a product from among competing providers is a relatively small part of the adviser’s service and are concerned that the FSA’s proposals do not appear to recognise or encourage this wider view. “
Towers Perrin criticised the FSA for failing to recognise that advice can be delivered to a high standard by tied or multi-tied advisers, as well as by whole of market independent financial advisors.
It says: “Indeed, it is possible for tied advisers to deliver a better service – in terms of both outcome and cost. What is important is that advisers have the appropriate skills and tools – and that they are remunerated in ways that enable them to assist their clients impartially.
“The quality of advice is increasingly independent of the breadth of the product range available – particularly as product designs become more similar and as wider fund ranges allow extensive choice for the consumer, even within a tied product range or single platform solution.”
It adds: “The FSA’s proposed way forward is a backward step compared with the proposals contained in the original RDR Discussion Paper, “A Review of Retail Distribution“ published on 27 June 2007. We urge the FSA to take a broader view of consumers’ need for advice – and how the service they receive can be upgraded and made more widely available.”