FSA goes ahead with abolition of polarisation

The Financial Services Authority last week confirmed its decision to proceed with the abolition of the polarisation regime.

In future, firms advising on packaged product business will be able to offer their customers a greater choice of product – and from as many providers as they wish.

Announcing the decision at the annual dinner of the Association of Independent Financial Advisers, FSA chairman Howard Davies told guests: “The polarisation rule has not delivered the consumer benefits hoped for when it was introduced. We are convinced that a free market will help consumers more.

“In future, consumers will find it easier to shop around for the best product and providers will be free of the anti-competitive constraints that have made it difficult for them to offer consumers that choice.”

Under the proposals, firms currently restricted to selling just one company&#39s products will be able to offer a full range of products, while firms wishing to continue to trade as independent can do so provided they advise from across the market and offer their customers the option to pay by fee.

James Mayne, head of strategic development at Britannic Money, says: “Many respondents felt that this issue could not be properly considered until the polarisation review had been concluded. Howard Davies&#39 announcement has provided some clarification to the investment market but in the mortgage market we are still very much in the dark.

“The FSA should now consider providing further information on how this could work in the mortgage market and reconsulting on this particular question.”