FSA says statement results in clearer business practices and confidence boost
Consumers buying financial services may benefit from more transparent business practices, following the FSA's publication of its Retail Distribution Review (RDR) feedback statement.
The FSA said the proposals will "reform the investment market" and establish a new level of confidence and trust for consumers through a number of measures such as having clear distinctions between independent and sales advice; setting minimum qualifications for different types of advice and establishing a professional standards board; requiring independent advisers to agree remuneration with customers before giving advice and introducing a standard for independent advice to ensure it is "unbiased, unrestricted and extends to all types of investments."
Jon Pain, managing director of retail markets for the regulator, said the proposals provided a "golden opportunity" to reinvigorate the financial services market.
He added: "Consumers need help more than ever with their financial decisions, whether planning for retirement, saving for the future or dealing with current financial pressures. We believe there has never been a better time to foster more confidence in the industry and provide consumers with real help and advice to empower them to use savings and investments products more often.
"The reforms are wide-ranging and will be challenging for the industry, but they also present significant opportunities for firms and individuals operating in the retail investment market to modernise practices, raise standards, and treat their customers fairly."
The proposals were generally welcomed across the industry, however, the Association of IFAs (Aifa) expressed "grave concern" at the feedback statement, saying that it squandered "many of the important advances made in (the) Interim Report" and that the proposals would lead to a "lack of clarity".
Chris Cummings, director general of Aifa, said: "The new proposals perpetuate historic flaws in financial services. Most importantly, consumers want clear blue water between those who are on their side and those who have an obligation to sell a product."
He added: "The term 'sales adviser' only muddies the water further and will leave many consumers none the wiser about the type of service they are receiving."
The ABI lead the praise by saying that consumers would benefit from the reforms.
Stephen Haddrill, director general of the body, said: "Today's announcement is a positive and significant milestone in the reform of financial advice and is very good news for consumers. The insurance industry fully supports the FSA's proposals and will continue to work with it to ensure they are implemented in full."
