Liberal Democrat trade and industry spokesman Vince Cable launched an attack on IFAs last week for not being “wholly independent”.
Amazingly, Cable then claimed brokers “are being made scapegoats” in mis-selling scandals, and called for a major reorganisation of the financial advice system.
Identifying mortgage advice as the weakest link in the financial services chain, Cable attacked the decision to leave advice out of the regulatory system.
The Liberal Democrats are also concerned that the FSA has let “one or two things slip through its hands” – most visibly the Equitable Life debacle. Cable and his aides will use meetings with the Treasury's economic secretary Ruth Kelly and the FSA to argue for a widening of the FSA's remit.
Cable says: “We need a completely independent stand-alone advisory system which is supported by industry as a whole not by individual companies.
“Anybody trading as an IFA would have to be completely independent of product suppliers.”
The system envisaged would see IFAs advanced on a fee basis and the removal of product-linked commission payments.
Lenders would possibly contribute to a 'top-up' pool for distribution among brokers. Cable acknowledges the implementation would probably take new legislation, but says that tied products are a “link that needs to be broken and be seen to be broken.”