Tied turns as FSA splits the market

I don't believe that potential borrowers worry too much about the compliance issues that financial and mortgage advisers have to go through. As long as they hear the words such as 'qualified, or regulated, or licensed' most people seem happy enough to accept that the person they seek advice from is suitable to provide the information/advice/ placement service they seek for their own particular needs. However, behind the scenes (from consumers) there is general unrest within the 'advising community' relating to potential changes being proposed by our regulator, the Financial services Authority (FSA)

I saw the following report on an online financial news provider's website today to illustrates the unrest financial and mortgage advisers may soon be experiencing:

"Multi-ties could be stripped of their right to be called advisers as part of a radical shift in FSA thinking which sees the regulator acknowledge the value of whole of market advice.

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 mentality 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 (Retail Distribition Review) 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."

I hope you feel better for reading that ! As always, the Financial Services industry is anything but dull.

Today's thing to ponder (an occasional series) :
Before they invented drawing boards, what did they go back to?