A policy to follow

Those industry super fund advertisements of the people the same age paying the same amount ending up with vastly different payouts have clearly registered with me but the practice of so-called financial planners charging their outrageous commissions continues. Clearly not everyone has yet got the message of the cumulative impact of that percentage being skimmed off every year for ever. In Australia there has been much discussion about ensuring that the commissions paid on financial products is properly disclosed to those being advised but I notice that the British Financial Services Authority (FSA) has outlined a far more radical shake-up of the investment, pension and life assurance industries by spelling out plans to ban independent financial advisers (IFAs) taking commission for selling savings plans full stop.
Under the proposals, to come into effect at the end of 2012, advisers will have to charge customers a fee rather than receiving commission from the savings and pensions companies they recommend. The London Daily Telegraph reports consumers will be told how much the advice is going to cost up front and be given the choice of paying it as a fee or having the cost deducted from their premiums.
The FSA is also moving to make clearer the different types of advice given by financial planners. Advisers will have to describe themselves as either offering "independent advice" or "restricted advice" – where recommendations are based on a small range of products. Tied sales forces of banks and insurers, who cannot give independent advice, will be made to specifically disclose the size of their commission charges to improve disclosure. Advisers, whether independent or tied, will also be required to hold a qualification equivalent to passing the first year of university. An independent Professional Standards board will oversee the regime.

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