Uncertain times lie ahead for the protection sector following the publication of the Financial Services Authority's (FSA) interim report on the retail distribution review (RDR) last week.
There has still been no firm indication that the RDR will be including protection products but the suggestion that an adviser must be able to advise on the whole of market lends itself to suggest that it will.
However, the FSA does not appear to be tripping over itself to clarify the position for the industry. The FSA needs to makes its stance clear for this market so that intermediaries can make clear headway rather than fumbling around in the dark.
Alan Lakey, principal of Highclere Financial Services, slammed the RDR has a horror story saying that it will lead to greater confusion. While only whole of market intermediaries will be called advisers when the RDR comes into effect, Lakey says that it could lead to “a bizarre situation where somebody could be whole of market for protection and mortgages but because they fail to meet the criteria set out for ‘advisers’ (for example if they do not have the sufficient qualifications) they become ‘salespeople’ for investments and pensions”.
In addition, he says the new ideas are likely to result in fewer whole of market advisers because many will not want or may not be able to pass the exams. Therefore the number of whole of market advisers is likely to diminish to the detriment of consumers.
So while the Association of IFAs (Aifa) and some other organisations have supported the interim report findings with the recognition that ‘advice’ must be separated from ‘sales’, figureheads have acknowledged that the FSA still has some way to go.
It seems that while the FSA’s intentions seem honorable looking at the big picture, it needs to start focusing on the nitty gritty.
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