Protection advisers will need to be clear when building simplified advice-style propositions to address basic client needs, an adviser firm has warned.
Colchester-based IFA Plan Money said that the FSA guidance around simplified advice was a grey area and "very close" to that for full advice.
The firm is rather building a technology-based non-advice arm to address clients' basic needs; protection will be the first area to feed into the proposition.
Director Peter Chadborn said: "It would be non-advice rather than simplified advice. The model for simplified advice would be so close to full advice in terms of regulation that I cannot see anyone doing it just now.
"For us it is very much black and white; either full regulated advice or it is not advice. Adviser firms will need to be very clear on this."
The development will mean clients are faced with a choice on how to do business with the firm when they land on the website.
Chadborn added that protection "fitted in well" with the concept to start with.
He added: "It goes two ways. It is important for us to offer it as a solution to clients not wanting full advice. And we can give them a choice rather than say how they have to do business with us or turn them away."
In FSA final guidance on the evolving advice-type published in March, the regulator stated that firms needed to consider charging structure, adding: "...in particular if it sells commission (for example, a protection product) and non-commission attracting products through simplified advice.
"Firms who also sell products that could attract commission through simplified advice could choose to operate a fee-only charging model."
According to Northamptonshire-based IFA Investment Coach, plans for developing a simplified advice arm have been put on hold due to compliance complications.
Director Andrew Reeve said: "There are a lot of unknowns and complications on this and we could not even get an agreement amongst our compliance team.
"If we did go down this route with protection it would be through a restricted arm. It means a lot of attention to compliance and FSA registration and a lot of work."
He explained that the firm's planned proposition would initially serve very basic needs, such as budgeting and cash flow issues, rather than the middle simplified-advice piece, but that plans had currently been frozen.
Reeve added: "I think beyond RDR the protection market will be quite well served. A number of advisers will move into this commission-generating area so it may not be that profitable to offer it in this sort of proposition."
The FSA and Financial Services Consumer Panel have both pointed to simplified advice as a way of catering to the mid-to-mass market.
Simplified advice has not yet been defined in the FSA handbook but has been described as advice for middle and low income earners when examined in the context of the RDR.
According to the FSA, the term has been adopted to describe streamlined advice processes that address straightforward consumer needs.
The advice type is categorised by the City watchdog as "a form of restricted advice".
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