The British Financial Services Authority has published a consultation paper on abolition of the polarization regime for financial advisors. The FSA board’s decision to abolish polarization was announced on Nov. 21, 2002, following lengthy consultation.

Canadian regulators have been closely following this process, as they work to develop their own new regime for regulating financial advice.

The abolition of the polarization regime in Britian means that firms will have to clearly explain to consumers the scope of advice or service they are offering. The FSA also believes it’s important that there be greater transparency for consumers about the cost of advice. This will be achieved through a new disclosure rules about advertising and firm correspondence.

There will also be a consumer education campaign. The FSA intends to include consumer alerts on its website, use leaflets and the media to get its message out. Firms may be encouraged to send approved literature to consumers explaining the charges that have been made.

The FSA does not propose to implement the removal of the polarization restrictions until it has also concluded that separate consultation on the cost of advice. This means that removal of the polarization restrictions is not likely to take effect until late 2003 or early 2004.