De-polarised

Confirmation that the polarisation regime is to be abolished came in Howard Davies’ speech at the annual dinner of the Association of Independent Financial Advisers (AIFA) last month. The FSA chairman said that the regulator had changed its mind about the use of defined payments as a criterion for IFA independence and accepted the “menu option” developed by AIFA under which firms will be able to call themselves independent if they advise on the basis of all suitable products in the market and provide customers with the opportunity to pay by fee. Consumers will be furnished with an initial disclosure document to explain the different options. The “better than best” rule under which an independent intermediary firm may not recommend a product if the provider owns more than 10% of its equity is also to be removed. Appointed representatives will still need to have a single principal for investment business but this will not apply to those who merely ‘introduce’ customers. Consultation on the draft rules to effect these changes will take place in January.