Product category:
IFAs / Other professionals
News Release from: Standard Life Bank | Subject: IFAs
Edited by the Insidemoneytalk Editorial
Team on 01 May 2008
Standard Life responds to FSA Retail
Distribution Review
The FSA has today published the initial summary of the comments they received from consumer bodies,
advisers and providers to their Discussion Paper DP07/1: A Review of Retail Distribution (June 2007) This Feedback statement is designed to give the industry an idea of the 'direction of travel' the FSA is taking ahead of a formal feedback statement and consultation paper due in October 2008
This article was originally published on Insidemoneytalk on 8 Aug 2007 at 8.00am (UK)
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In summary: 1) Many respondents have called for a simpler landscape, in particular for a clear distinction between 'advice' and 'sales'.
The FSA have set out a much simplified landscape consisting of three components.
Advice - there would be only one type of adviser and a step-change in the standards required of advisers - All advisers would be independent, both in terms of status and in their practices, - All advisers would operate 'remuneration determined without product provider input' - All advisers would recommend products from across the whole market.
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- They would also all meet appropriate minimum professional standards.
Sales - FSA's starting point for sales is services that are strictly non-advised.
These services are intended to encourage higher levels of savings and protection so that the needs of more consumers are met.
They will operate within the current regulatory framework, but FSA acknowledge that they may need to do more here to give guidance to firms.
Money Guidance - this is a newly proposed information and guidance service.
In partnership with the Treasury, FSA are taking forward a 'Pathfinder' following recommendations made by the Thoresen Review, to determine whether and how this national service might develop.
Money Guidance has, amongst other things, the potential to stimulate more consumers to seek out regulated advice and sales services.
2) FSA are issuing three specific challenges to the industry, consistent with their desire for market-led approaches in the first instance: Challenging more product providers to change their business models so that they do not determine how much advisers are paid.
Challenging the industry to develop and implement an agreed common framework for professional standards.
Encouraging firms to put forward ideas for new sales services and make the case for FSA action to help implement in a way that delivers better outcomes for consumers.
A full copy of the FSA's response paper can be found here http://www.fsa.gov.uk/pubs/discussion/rdr_interim_report.pdf.
Standard Life view: Standard Life supports the FSA findings that a simplified tiering of Advice and Sales services is necessary to refine the overly complex tiers and definitions originally proposed.
We particularly welcome the fact that the FSA have listened hard to the points raised by consumer bodies as well as those in the industry in order to bring clarity to consumers whilst potentially reinvigorating the Independent Financial Advice sector in the UK.
Paul Matthews, Managing Director Distribution, said: "We think the FSA have broadly got things about right.
Our strong relationships with independent advisers and our commitment to putting the customer at the heart of everything we do led us to much the same conclusions." Peter Jolly, Head of Distribution Policy, commented: "We know of many highly professional IFA firms and advisers who have successfully shifted their business model to either fees or Customer Agreed Remuneration whilst predominantly moving to a platform based model.
It seems that this is indeed the way forward and the FSA's direction of travel is largely in line with many adviser firms.
I'm particularly pleased that the FSA have challenged all providers to move to models where the customer determines how much their adviser is paid.".
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