Revolution on the High Street as Financial Advice Rules set to change
Reports of the imminent demise of independent financial advice have been greatly exaggerated says IFA Promotion
The biggest change on the financial high street for 16 years is due to kick off on 1st December 2004, as new rules surrounding the provision of financial advice are introduced by the regulator, the Financial Services Authority (FSA). The two main changes are: - Multi-tied adviser - The current system allows two types of financial adviser; independent (who advise on all products in the market) and tied (who can only advise on products from one company). Under the new rules a new type of adviser – "multi-tied" – is created. The multi-tied adviser will offer consumers the choice of products from a limited range of companies they have selected.
- ‘Keyfacts’ information - Under the new rules all advisers will have to provide customers with two ‘keyfacts’ documents, explaining their status, the services they offer and a menu of their charges – to enable consumers to properly understand the value and cost of the adviser’s proposition, and to shop around for the best type of advice for them.
The new rules, known as "depolarisation" come into force from 1st December 2004, with a six month grace period for companies to comply. Over this period some tied agents (such as some banks and building societies) are expected to become multi-tied, as are some advisers who are currently independent. With these changes comes the added risk of increased consumer confusion, making it a more important time than ever to highlight how the advice process works and help consumers to decide what is the right type of advice for them, warns IFA Promotion. Commenting on the forthcoming changes, David Elms, Chief Executive of IFA Promotion said, "Many people are unclear about where to get financial advice from. Whilst these changes will give consumers better information at the beginning of the advice process – for example on the cost of advice – there is a risk that more types of adviser will add to confusion." "Reports of the imminent demise of independent financial advice have been greatly exaggerated. Despite the forthcoming changes, we expect the independent advice sector to prosper as consumers continue to value and demand the services of an IFA - the only type of adviser that gives advice based on all the products on the market." Elms concluded, "We want to be central to the education process, since experience tells us that when the choices are explained, consumers recognise the value of independent financial advice. With the introduction of a third type of adviser, it has never been a more important time to relay to consumers the benefits of seeking whole of market, independent financial advice, and most importantly, how to find it." For details of local independent financial advisers, call the IFA Promotion freephone consumer hotline on 0800 085 3250 or visit www.unbiased.co.uk Financial News Feeds provided by OneCompare.com
Date published: 12/1/2004 11:31:00 AM
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