In its interim report on the retail distribution review the regulator says it recognises that firms operating in the group pensions market may not be able to move to a pure fee basis.
The FSA says feedback has consistently indicated a need for it to consider the group market separately. It says it recognises the significant differences from the individual market, particularly in cases where the employer is sponsor and payee in a product purchase.
The regulator says it wants to see a simpler advice landscape, with a clear separation between whole of market advice and sales, and also laid down a three-point challenge to the industry to get its house in order.
This comprises a call on product providers to change their business models so that they do not determine how much advisers are paid; a plea for the industry to develop and implement an agreed common framework for professional standards; and a challenge to firms to present propositions to it for new sales services that deliver better outcomes for consumers.
A feedback statement will be issued in October which will set out in more detail the regulatory implications of the review and the timetable for change.
Amanda Bowe, head of RDR at the FSA says: “We have been listening very carefully to the feedback provided over the last few months and today’s report shows how we are likely to respond to that. Respondents told us to keep things simple, have a clear distinction between advice and sales, ensure alignment with the potential Money Guidance service, and pursue our aims of raising professional standards.
“We think a simple landscape is important if consumers are to understand the industry and have trust and confidence in those they are dealing with. And we think the industry needs to be able to serve the changing needs of consumers as well as treat them fairly. However, we do not underestimate the significant difficulties that come from this simple picture and we need to deepen our understanding of the impacts on consumers and firms – in particular whether this structure is economically viable.”