AIFA responds to government proposals
July 24, 2007 by admin
Filed under News, News-Banking
Recently the government announced its intentions to crackdown when it came to Independent Financial Advisers to ensure that consumers were receiving sounds advice based on their needs rather than on which lender would be the IFA the most money in commission.
The government stated that financial adviser services would become more standardized and that those wishing to operate as independent advisers would have to seek payment for the advice from the customer and not from the lenders that he or she recommends.
The European Commission has also put forward a green paper that recommends a single, standardized European market.
Chris Cummings from the Association of Independent Financial Advisers stated: “The EU should be mindful that the UK retail financial distribution market is unique because the majority of business in retail financial products is arranged through intermediaries. The delivery of this advice, according to Deloitte research, has the potential to improve the wealth of low to medium income earners in the UK from £38bn to £78bn even if only 10% were to optimise fully the advice given.”
He added: “We support the Commission’s views that there must be a rigorous and thorough analysis before introducing any new regulations, which takes into account both the benefits and the cost to firms and consumers, and the impact on the market. There are many reasons why consumers are naturally restricted from using cross border financial services such as language, taxation, social welfare and currency. The Commission must consider these issues before seeking to force standardisation that will not benefit consumers.”
A letter that has been signed by a number of industry professionals has been signed and sent to the commission to urge officials to improve their knowledge of consumer demand before any action is taken on this issue.
Tom Smith
24th July 2007
