FSA chooses from AIFA menu

The FSA&#39s decision to drop its defined payment system should help “more than three quarters” of IFAs to remain independent, the Association of Independent Financial Advisers says.

The FSA announced it is dropping the proposals outlined in CP121 for AIFA&#39s “menu” approach to fee disclosure last week. It gives IFA clients the option of paying by fee, or paying the broker by commission. IFAs will have to disclose the commission alongside average market rates.

Paul Smee, director-general of AIFA, told Mortgage Strategy: “This result is good for consumers and good for independent advice. Dropping defined payments will allow people to stay independent rather than having to change their business status. In the light of this decision, people can now take a decision on their status based on their business needs rather than regulatory needs.”

The regulator also announced a temporary rule change on professional indemnity insurance requirements last week. The FSA says: “This action has been taken following concerns expressed by some IFAs that they were finding it increasingly difficult to obtain complaint cover.”