The UK’s Financial Services Authority is proposing new de-regulatory proposals to improve choice and give greater access to financial advice for consumers.

The proposals are the result of the FSAÕs wide-ranging review of the way in which financial advice is structured in the UK. They include:

– The existing polarisation regime for financial advice be removed (under this regime, advisors must either be independent or belong to a captive sales force);
– Firms holding themselves out as independent advisors will need to operate only on a defined payment system to remove the potential for commission bias;
– The rules that limit investment in firms of independent advisors should be removed, which will help maintain a robust independent sector for advice;
– Consumer awareness measures and disclosure obligations on firms should be used to help ensure that consumers understand the advice service that different types of firms offer.

The FSA expects captive advisors will be able to offer more products, independent advisors would have to move to a defined payment system basis and would no longer be able to be remunerated by commission. A defined payment system requires an up-front agreement between the customer and the advisor which defines, in advance, the amount to be charged.

The FSA is also seeking views on potential wider changes which could improve the functioning of the market by broadening access to affordable financial advice and improving transparency surrounding the cost of that advice. These are: the scope for a tailored advice regime to help deliver the benefit of financial advice more widely to the population, particularly among consumers on mid to lower incomes; the unbundling of product charges from the cost of advice to improve transparency for consumers.

The FSAÕs proposals are contained in a consultation paper on which the FSA is seeking comment by April 19. In light of responses received, the FSA Board will reach final decisions in the summer.