'Strengthened independent sector is here to stay' as new financial advice rules take effect across the UK
Depolarisation rules take effect on 1st June - make sure you understand what type of advice youre getting, says IFA Promotion
New Keyfacts information to set out adviser status and costs up-front: only IFAs must offer a fee-payment option
On 1st June 2005, the Financial Services Authoritys new rules for the provision of financial advice take effect. IFA Promotion - the organisation promoting the benefits of independent financial advice - has created a dedicated website (www.unbiased.co.uk/beadvised), to help people understand these changes and choose the most suitable type of adviser for their needs.
The two main changes are:
- Multi-tied adviser - Under the new rules a third type of multi-tied adviser is added to the existing choice of tied (to one product provider) or independent financial adviser (IFA). The multi-tied adviser will offer a choice of products from a limited range of companies they have selected.
Keyfacts information - 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 understand properly the value and cost of the advisers services, and to shop around for the best type of advice for their needs. Only IFAs are required to offer customers a fee-payment option, although other advisers may choose to.
David Elms, Chief Executive of IFA Promotion, said, The FSA is introducing new cost and status disclosure requirements, which will enable people to shop around and properly assess the value on offer from different advice types. Over time, advisers having to explain the value of their service should convince more and more people to pay for advice by fee, an option which all IFAs must offer their customers from June 1st.
However, with any major rule change comes room for confusion, so we are urging people to make sure they understand the type of advice they are receiving, and to ask questions if they are at all unsure.
The implementation of these new rules follows a six month transition period, to allow advice firms to alter their business models, systems and marketing material. However, despite initial industry fears of a flight away from independence, IFA Promotion which represents the vast majority of UK IFA firms reports that over 80% of member firms have chosen to remain independent.
Elms continues, The vast majority of IFAs have chosen to remain independent, and thus able to advise impartially and make recommendations based on all the products on the market. In addition, weve seen a marked increase in the number of IFAs reporting advanced qualifications, which suggests that IFAs intend to differentiate their services on the basis of quality and professionalism. This can only be positive news for people taking independent advice, and for the financial services industry, as the IFA-client relationship becomes increasingly based on holistic, long-term financial planning.
Elms concludes, With the introduction of a third type of adviser, and firms offering different advice models for different product types, 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.
To find out all about the new rules for financial advice, people should visit www.unbiased.co.uk/beadvised, or call 0800 085 3250 for a free copy of
IFA Promotions consumer guide.
-ENDS-
For further
Chief Executive Lansons Communications
IFA Promotion Tel: 020 7490 8828 / lizw@lansons.com
Tel: 020 7833 3131
For expert comment or case studies from over 200 media-friendly IFAs, journalists should call IFA Promotions Media Services hotline on 020 7294 3682 or search online in Media Services at www.unbiased.co.uk
1. Independent Financial Adviser Promotion
IFA Promotion was established in 1989 to promote the value and accessibility of independent financial advice to the public. It represents around 9,000 firms of independent financial advisers across the
IFA Promotion believes Independent financial advice should be:
Affordable. The option to take independent financial advice should be available, by right, to all - not just the wealthiest in society.
Convenient. IFAs should be available in the location of the consumers choice, wherever they live in the
Transparent. It must be clearly transparent to consumers who is able to offer independent financial advice and who is not.
2. Independent Financial
Abbey | Mortgage Express |
AXA Life | National Savings & Investments |
New Star Investment Funds | |
BUPA Health Services | |
Canada Life Ltd | Old Mutual Asset Managers ( |
The Childrens Mutual | Prudential |
Clerical Medical Investment | Scottish Equitable Plc |
DWS Investments Ltd | |
Friends Provident | |
GE Life | |
GMAC Residential Funding | Skandia UK Group |
INVESCO Fund Managers Ltd | Southern Pacific Mortgage Limited |
Legal & General | Standard Life Assurance Company |
London Mortgage Company | |