Open letter to the FSA
I think all these changes mean well but are a waste of time.
You seem to be worried that banks and direct salesforces can only sell their own products and you want them to sell other products, too. Some banks were independent but stopped because they wanted more money and therefore started selling their highly profitable, anti-consumer products.
Your proposals will allow them to sell more products which do not have to be best for the client but can add more highly profitable sales to the bank to the detriment to the consumer.
Direct salesforces will continue to be incentivised to sell the products with the most commission for themselves be it their own product or that of another provider – again at the detriment of the consumer.
Fee-based IFAs will be pleased they alone will keep the title independent financial adviser but as the proposals suggest, they will work on a fee basis only. Does this mean they have to return all fund-based renewals etc to the clients?
The majority of IFAs who are commission based will now be called distributors but will offer less products than they currently do. If I am now called a distributor rather than an IFA, are all my clients meant to leave me? I think not because the only other alternative is to go to a fee-based adviser and pay £100 an hour plus vat or more, which they would already be doing if they wanted.
So, in short, what are these changes all about? Why does the FSA want to give more power back to the banks when it is the banks who have regularly sold the worst-value contracts and topped the Ombudsman complaints tables? There is clearly a hidden agenda and it is a disgrace that such anticonsumer measures can be introduced in the name of “making the market work for the consumer”.
The bottom line is that the commission-based IFA is the best thing that has ever happened to middle-income families who do not have the financial assets to justify paying fees instead of commission, yet want to do better than purchase the industrial insurance products that were originally offered to lower-income families and want to do better than the sub standard products offered by the banks.
You can take away my title “IFA” but I don't care because my clients buy me and my services, not my name and they will deal with me whether I call myself IFA, distributor or chocolate cake.
Browning Financial Planning IFA,