Financial advice and sales set to be split

Firms offering financial advice and those providing products are set to be split.

The Financial Service Authority's (FSA) Retail Distribution Review (RDR) interim report out today calls for a "simple and clean separation" of market services between advice and sales.

A greater role for the government's proposed generic financial advice service is also proposed.

Further proposals include for advisers to cover the whole of market, and for higher professional standards.

Amanda Bowe, FSA's head of the RDR, said: "Respondents told us to keep things simple, have a clear distinction between advice and sales, ensure alignment with the potential Money Guidance service, and pursue our aims of raising professional standards.

"We think a simple landscape is important if consumers are to understand the industry and have trust and confidence in those they are dealing with."

However, any solid change – and alterations to regulations - is still some way off with the FSA still to set out a timetable for new rules.

"We remain committed to taking the time to get things right and will introduce proposals that will lead to a more efficient and effective retail investment market for everyone – consumers and firms," said Ms Bowe.

The Association of Independent Financial Advisers (AIFA) responded to the RDR praising the proposals for a clear demarcation between advice and sales.

Chris Cummings, director general of AIFA, said: "We're pleased that the FSA has been true to its word and put the needs of the consumer at the heart of its proposals.

"Given the economic climate, consumers need professional financial advice now more than ever."

He added: "From the outset, we have said that the RDR should enable more consumers to get access to better financial advice. Consumers have a right to know whether or not they are being advised or sold a product, and they must have a choice over how they pay for that advice."