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Which? attacks ABI basic advice regime

Consumer group Which? has criticised the ABI’s guidance on basic advice for fail-ing to alert consumers to their reduced regulatory protection under the basic advice regime.

The ABI’s guidance is des-igned to improve consumer knowledge and confidence in the basic advice. It outlines what this is and what is expec-ted of financial advisers who offer basic advice.

But senior policy adviser McAteer says the ABI guidance fails to warn consumers that they will have less recourse to the FOS if they are given bad advice. He says that because advisers do not have to perform a full fact-find before recommending a product, the risk is transferred to the client and it becomes difficult for the client to prove to the FOS that they have been missold.

An ABI spokesman says its guidance makes it clear to consumers that it is meant to be read in conjunction with the FSA’s recently published Frequently Asked Questions on basic advice. He says: “Our guidance won’t provide the full picture but there is not much point duplicating work done by the FSA.” McAteer says: “In a customer factsheet on basic advice, there is no excuse to miss out this crucial information.”

Aifa deputy director gen-eral Fay Goddard: “The ABI’s guidance makes it clear what people can expect from basic advice but the fact remains that basic advice is fraught with dangers and is not suitable for pensions.”

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