In addition to those already mentioned, current reviews by the FSA include: comparative information, polarisation, and the recently announced investigation into with-profits policies. The insurance industry has also created its own initiative, Raising Standards. AIFA remains unconvinced that diluting polarisation would benefit the consumer, as the current rules are clear and their dilution could have a negative impact on confidence in the market.
A key issue for any consumer is whether an investment is suitable for his or her needs. AIFA believes that the FSA downplays the importance of suitability when it comes to products whose characteristics are regulated such as stakeholder pensions and CAT standard ISAs. Too much weight must not be placed upon such a standard to guide investors into the correct purchasing decision. For example, the FSA does not explore whether its proposals are sufficient to ensure that stakeholder pensions are sold to those for whom they are suitable; the comparisons made are with other forms of pension provision, not other financial instruments.
There will be many consumers whose financial priorities lie – should lie – elsewhere than with putting money into their pension. We are not clear how customers of those tied agents, whose employers ‘adopt’ other provider’s products, will understand the status of advice they are receiving. These changes to the polarisation regime are taking place before what the FSA describes as the “measures to ensure consumer understanding improves”.for more info : Valuations NSW
So, even though the FSA is concerned that currently around 20% of consumers are confused about the status of their adviser, the remarkably high number of 80% (Report to the FSA by London Economics, July 2000) understand whether their advice is independent or limited to the products of a single provider. With the introduction of a third type of adviser into the market place, we believe that confusion will increase and this would clearly be a retrograde step.