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Banks have described as "a plus" an FSA decision not to mandate the wording they will need to use to describe their restricted offering to clients after 2012.
The British Bankers' Association (BBA) says a mandatory statement would have been unfair on both consumers and firms, which offer "many different types" of restricted services.
In its final rules on the distribution of retail investments, published on Friday, the regulator said it agreed proposed wording "would not work" for all business models.
It offered an example of this: where 'restricted' applies to the range of products considered, but not the range of providers.
However, the FSA said firms must still disclose orally and in writing to clients they are receiving restricted advice and communicate the "nature of that restriction".
Peter Tyler, BBA retail policy director, says: "This [decision] was a plus. There are many different types of non-independent firms out there that need flexibility in the way they can describe their services."
The Association of IFAs (AIFA), however, said it was "disappointed" the FSA decided not to enforce a specific set of words which would have, it argued, "ensured consistency across the market".
Elsewhere, Tyler said he was unhappy the FSA had decided to run with the term 'restricted' although agreed a catch-all term has been difficult to find.
The FSA said suggestions it received included 'affiliated advice', 'advised sales', 'restricted guidance', 'restricted recommendation', 'specialised advice', 'specific advice' and 'tied advice'.
But it settled on restricted as this was the "most effective" in consumer tests.
"We were concerned consumers would not necessarily interpret the term in a way that helps them understand the nature of the service they are receiving," Tyler says. "But we understand it was a challenge to come up with a term that would differentiate independent from non-independent advice."
"A lot of consumers, I think, already recognise the difference between seeing an IFA and sitting down with a bank adviser because many already have a relationship with their bank.
"Banks will implement the new rules and we support the splitting of the cost of advice from the cost of the product. Now the value of financial advice should become clear to consumers whether it is received from a bank or an IFA."
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| Comment | Banks welcome axing of ‘mandated’ words to describe restricted service |
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Shocked, NOT!!
No surprises here then. Once again the rules for Banks being watered down whilst the rules for IFA's get evermore tighter and prescriptive.
Posted by: CSC
Disgraceful climbdown
Yet again an example of how the FSA puts the banks interest ahead of the consumer. In an environment where the FSA wants to increase 'consumer awareness' of financial products how will this help them. Leaving them open to vague descriptions of the advice they will receive. Tyler's comments about it being 'Not fare to the consumer' are laughable. Why re-invent the wheel, consumers are getting used to the idea of independent advice. We don't need new words to describe what is needed, it is straightforward: - Independent Advice - Non Independent Advice Lets call it what it is and stop wasting thousands of pounds and man hours!
Posted by: David Rolleston
Disgraceful
This climbdown would suggest that the FSA does not understand the nature of banking staff in the financial advisory world. However, we know this is not the case. They know full well and this is what makes this decision all the more shameful. In the absence of meaningful qualifications and training, relatively high staff turnover and hard incentives the only thing these "advisers" have in their armoury is sales tricks and being economical with the truth. I have spent a good amount of time getting clients out of completely unsuitable contracts sold (not advised) by such salespeople. Given an inch, any loopholes will be exposed to a mile by exaggeration. A complete disgrace and once again the public will suffer. Independent financial planners will also suffer having to pick up the mess that is left when highly effective salespeople have done what they can.
Posted by: Proudly Independent
FSA climbdown on banks' advice
BONJOUR ANGLETERRE VOILA! There is your evidence of the corruption of the FSA and why your Conservative Party wish to scrap the FSA and amend the ridiculously anti-consumer (and thereby anti-IFA) RDR. Haven't you all woken up to who is running your financial services industry yet? It is now so corrupted by the greedy and the ignorant, that the UK financial services industry will soon be the laughing stock of the World. Your system and the IFAs wer the envy of us all before the RDR was promoted by the corrupters. It's now starting to show the true net cost - which will more than double - wait and see or save yourselves now and stop it.
Posted by: MICHAEL FORBES BATES
THe cracked the whip on this decision ?
The treasury I bet, Why does the FSA think that consumers will be any better off not being told properly what type of advice they are getting. The Banks will continue to lie to clients and use the IFA Fee regime as a reason for not using an IFA. Will they still use the 'Marketing Allowance' crap excuse for inflated commissions ? I think so. This Government needs to sort this out now
Posted by: David Curley
banks welcome axing
I wonder how many bank directorships for retiring senior FSA staff it took to swing this one.
Posted by: Captain IFA
Confirmation of Who controls Who
As we have always known the Banks control the regulation and the FSA don't know how to handle it! Weak
Posted by: Mike
Cuprinol it
Dave Rolleston has called it exactly right. If the government wants customers to be able to easily differentiate between independent and non-independent advice, there is no need to think up weasly words for the latter. Just label it exactly what it is and be done with it. Or are they afraid that would drive customers away from their beloved banks.
Posted by: The Bear
Honesty needed
Isn't the main aim of the FSA to protect the consumer? Letting the banks et al make up their own description of their services is a step a mile away from anything of the likes. Only today, i received an invitation from St James Place to meet and listen to how their Partnership may be able to help me, 'With no loss of Independence or control'. If they cannot be truthful with a prospective (albeit unaware and unrequested) partner, what chance do the public have? Those who have just been let off the hook by this will work out the best way to put a positive spin on the fact that they offer limited solutions to client needs. The truth, bits of the truth, and sounding nothing like the truth will continue to be their motto.
Posted by: Wayne Baber
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Banks get own way
Yet another example of banks controling and calling the shots at the FSA! The word restricted should have remained as mandated.Contrary to what banks are suggesting, clients will still be mislead about the advice and the difference in advice they are receiving!
Posted by: Chris