You are here: Home - News -

Abolition of polarisation will allow better choice of products

by:
  • 03/12/2002
  • 0
The Financial Services Auth- ority (FSA) is to it proceed with the abolition of the polarisation reg...

The Financial Services Auth- ority (FSA) is to it proceed with the abolition of the polarisation regime, following consultation on CP121.

Firms currently restricted to selling just one company’s products to customers will be able to offer from a range of companies. Independent firms can continue, provided they both advise from across the market and offer their customers the option to pay by fee.

The FSA will not adopt the ‘defined payment system’, on which it consulted in CP121, but will develop the ‘menu’ approach, which emerged dur- ing the consultation period. The FSA will publish consultation draft rules on the ‘menu’ as early as possible in 2003.

The regulator, recognising the public’s need to understand the nature of advice and service being offered by firms will implement an initial disclosure document. Lord Hunt, chairman of the Association of IFAs, said: ‘Currently, advisers are clearly divided into two categories, tied or independent. Now there will be advisers who are tied to, or have contractual arrangements with, as many product providers as they wish. A robust status disclosure regime needs to be put in place so that consumers are clear about the nature of the advice they are receiving.’

The ‘better-than-best’ rule, preventing an independent intermediary recommending a product from any provider owning 10% or more of the firm, will be abolished. Abolition means independent firms will be able to attract investment to increase their financial strength. There will be safeguards to ensure that such investment does not undermine the independence of a firm.

Charles Ansdell, corporate relations manager at IFA Inter Alliance, while pleased independent advice will continue and seeing a menu system as sensible, thought the end of the ‘better-than-best’ rule spelt the end for many smaller IFAs. ‘The burden of regulation plus the altering of rules that will allow the larger IFA firms to attract investment, make it difficult for small IFAs to survive,’ he said.


Tags

There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.

Profiles

Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.

Marketwatch

Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.

Poll

Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
Read previous post:
TRADE BODIES

IFA Promotion (IFAP) IFAP, the organisation promoting the benefits of independent advice, has appo...

Close