AIFA said that as it stands the proposal is "impracticable, bureaucratic and would lead to a significant reduction in the number of independent financial advisers".
The ‘Association has proposed that the cost of advice should be disclosed, but this it needs to be comparable across all distribution channels.
Paul Smee, director general of AIFA, said: "There is more to independent advice than the method of remuneration. In particular, there is freedom from any contractual tie between adviser and provider and access to the whole market. We agree that IFAs must be open about their remuneration and the services they provide for that payment and should offer a choice of payment methods including fee and commission.
"This is a less one-dimensional approach to independent advice than appears in CP121. As currently drafted, the FSA's DPS does nothing to address the Government's concern about the savings gap. In fact, they might make it worse. Their proposals would, for example, strangle the development of advice in the workplace, as the existence of a restrictive DPS would make it difficult to persuade consumers to take advice from IFAs in this setting."
