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Treasury supporting call to monitor performance

Treasury Economic Secretary Ed Balls has called for greater clarity in the way consumers can evaluate the performance of individual advisers and backed FSA chairman Callum McCarthy’s recent attack on churning.

Speaking at a recent Financial Services Forum event, Balls said it is easy for a consumer to compare the relative performance of funds but not advisers.

He said the most important thing is to “make it clear to consumers upfront what charge they are paying and what they are getting in return”.

He said this is the normal principle by which markets operate and this is a sensible way to proceed in the advice sector although he pointed out that it is up to the FSA rather than the Treasury to decide on such matters.

Balls said he supported McCarthy’s recent Gleneagles speech, in which he said the current incentives for distribution are not working to incentivise firms to provide the best price for consumers.

Balls also backed McCarthy’s view that the best way to regulate was not on price but to leave it up to choice and competition.

Balls said: “If I am a consumer and I want to compare the relative performance of a fund I can do it but if I want to compare the performance of relative advisers, I cannot.”

On residential stamp duty Balls said the idea of reform had never been taken off the table but proposed industry solutions such as a move from a “slab-to-a-slice” sys- tem are not straightforward and produce losers as well as winners.

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