Legal & General has hit back against claims that consumers may not be getting the best advice if they seek help from a tied agent instead of an IFA.
In an open meeting held by the Financial Services Authority (FSA) to discuss the future of polarisation, it was revealed that consumers using tied agents do so for reasons of ‘trust and convenience’ ‘ suggesting that they are less likely to shop around for the best deal.
But John Morgan, spokesperson for Legal & General’s Mortgage Club, said tied agents can often provide the best deals for mortgage customers.
‘Lenders that have tied sales forces also have a lot of respect in the industry and can offer good value products. The comparative tables being introduced by the FSA next year will also ensure consumers are informed about their options and can get the best deal. Along with the trust and convenience that tied agents provide, there can be real benefits to consumers,’ he said.
The aim of the meeting was to discuss possible benefits for consumers by liberalising polarisation in the tied sector. Howard Davies, chairman of the FSA, told attendees the regulator’s aim was to secure consumer protection in a way that is less restrictive of competition.
‘We think this can be done while strengthening the provision of advice. Over the last three years, the number of IFAs registered with the FSA is up by over 40% as direct sales forces have reduced,’ he said.
Speaking at the meeting, Paul Smee, director general of the Association of Independent Financial Advisers, said the majority of consumers understand the difference between tied and independent advice and that polarisation has had an important part to play in the move to an advice rather than sales-based culture.
‘I do not believe the advances in levels of the professionalism and expertise of the IFA community would have occurred without the polarised structure of the market. The role of advice and financial planning has become more significant due to, not in spite of, polarisation. Most consumers know the difference between tied and independent advice even if they draw some surprising conclusions,’ he said.
