AIFA calls for clear divide between sales and advice

A clear distinction between sales and advice could help boost consumer confidence in the financial services sector, according to a report from the Association of IFAs (AIFA).

A poll commissioned by AIFA found 81% consumers said it was important to know they were being sold a product or advised on one when visiting a bank, IFA, building society or life company.

In AIFA’s latest report, Consumer Trust in Financial Services, the organisation calls for the FSA and the Treasury to make a clear distinction between sales and advice in the Retail Distribution Review (RDR) statement in October.

The trade body believes a clear definition of sales and advice will help build consumer trust, and help many people to re-engage with financial services, creating better levels of savings and investment.

The YouGov poll also found around 60% of people make decisions on financial products based on provided product information only, rather than seeking advice from a third party.

Eight out of ten surveyed who had bought a financial product with the help of an IFA felt their personal circumstances had been considered, compared to just six in ten who visited a bank.

Commenting on the findings, Chris Cummings, director general of AIFA, says: “Consumers deserve to know who’s on their side and acting in their best interests, and who’s just there to sell them a product.

“We believe that the benefits to the consumer in offering absolute clarity of whether a firm is ‘agent of the client’ or otherwise will go a long way to restoring trust in the sector. We call on the Government and regulator to make the distinction crystal clear.”

The RDR interim report has already suggested dividing the realms of advice and sales and AIFA is hopeful this will become a central part of the new regulatory regime.

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