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Good news for consumers as FSA backs ABIs distribution reform proposals

Consumers will benefit from reforms unveiled today by the FSA to the financial advice system in the UK. The reforms endorse the ABI's own proposals to improve financial advice, which have been discussed with the FSA throughout the Retail Distribution Review. Specific measures announced today include:

· Reform of adviser remuneration in order to eliminate the perception of sales bias. The ABI called for a new system of adviser remuneration to be introduced, in which the cost of advice and method of payment is agreed by the adviser and the customer, without any input from the product provider. The FSA has accepted the principles of this, which will form the basis of the ‘Adviser Charging' system.

· Improved adviser professionalism. The ABI called for minimum qualifications for advisers and a new body to govern and oversee all adviser qualifications. The FSA will introduce both measures.

These reforms will widen access to financial advice, bringing great benefits to the financial services industry and its consumers.

Stephen Haddrill, the ABI's Director General, said:

"Today's announcement is a positive and significant milestone in the reform of financial advice and is very good news for consumers. The insurance industry fully supports the FSA's proposals and will continue to work with it to ensure they are implemented in full.

"Moving away from the commission model of remuneration for independent financial advisers will eliminate any bias, or perception of bias, towards particular products. This means that consumers can have absolute confidence that the products recommended to them are best for them, not their IFA. Greater levels of professionalism and qualifications for advisers will also help to increase trust in financial services.

"Transparency is key throughout the advice process - of cost, level of service and expectations. These reforms will go a long way towards achieving this, and we believe they will work in the best interests of consumers by ensuring a healthy market and clear selling of financial products."

Last updated 01/07/2016