FSA defends sales advice plan after adviser onslaught

The Financial Services Authority (FSA) has defended its proposals in the Retail Distribution Review (RDR) feedback statement after an outcry from intermediaries.
Advisers condemned the proposals to allow non-independent firms to provide sales advice and said the FSA was backtracking on advances made in its interim ¬report published in April.
At the annual Sesame Symposium conference last week, Ivan Martin, executive chairman of the independent financial adviser (IFA) network, welcomed the ¬creation of a sales channel as the cost of independent advice could not be justified for every transaction. However, he did not welcome the confusion he expected to be created by a separate sales advice category.
Martin (pictured) said: “I am tempted to conclude that this Frankenstein creation is nothing other than a sop to bankers who … are desperate to ensure that they can continue to peddle expensive investment products wearing a mask of respectability that comes from calling themselves advisers. This is wrong and we will oppose it with all of our strength.”
Amanda Bowe, the head of RDR at the FSA, responded: “Since we published the report there has been an outcry from the independent sector that we have muddied the difference between sales and advice. We are surprised they have not seen the opportunity this distinction ¬represents.
“We could have let anyone giving advice, including sales, call themselves advisers. We have made sure they are clearly defined as sales.”
She added that sales advice firms must inform consumers they are not receiving independent advice and that the service is biased to achieve a sale. She also said that the term “sales advice” was a working title and might be changed.
Advisers at the Sesame event were also outraged that the FSA had ruled out a time limit, or long stop, on the period for customer complaints. Bowe said the ¬evidence provided for such a limit failed to identify net benefits to consumers and firms.
Martin urged the FSA to re-consider, saying the only way an adviser could be free of liabilities was when they were dead. “I urge FSA to show courage and leadership in removing this injustice and introducing a 15-year long stop for complaints,” he said.
He also rebuffed the RDR proposals to introduce an Independent Professional Standards Board. -Double regulators would inevitably lead to double costs, he said.