The FSA is proposing to remove the separation between independent financial advisers and tied agents because it does not feel that it has delivered the competition for value-for-money products that it was meant to do.
The ‘polarisation’ regime is now due to enter a three-month period of consultation, but critics are predicting that it could be the basis of another mis-selling scandal, and at the very least lead to a period of consolidation as banks and insurance companies look to buy independent advisers.
Sheila McKechnie, director of the Consumers’ Association, said: "While welcoming the FSA’s intentions we question whether the proposed reforms could ever deliver their objectives of providing consumers with greater access to advice and increasing the choice of financial products. These proposals could in fact further confuse consumers and make the distribution of financial products even more complicated."
"We do not believe these proposals will create a level-playing field in the market. Instead of boosting independent advice, which our research has shown to be the best way of providing a high-quality, professional service, these reforms are more likely to squeeze IFAs out of the market."
