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ABI set out proposals for fairer financial advice

The Association of British Insurers has set out proposals to ensure customers are given more transparent financial advice.

The proposals are contained in the ABI's submission to the Financial Services Authority’s Retail Distribution Review.

It says "the priority for the industry must be to meet customer needs" which in turn will boost demand for financial product and can be achieved by:

• Giving customers clear services that they can understand (sales and advice)
• Developing simple products that consumers can understand.
• Helping future generations access the market through improved Financial Capability and Generic Advice.

In response to greater demand, firms must deliver a higher standard of service, which can be met by:

• Ensuring all advisers can demonstrate their professionalism, by achieving a minimum level of qualifications, compulsory membership of a professional body and the establishment of a new standards body.
• Establishing a clear structure for paying for financial advice and linked to clearly defined and understood services that replaces the traditional commission structure, called Customer Agreed Remuneration.
• Effective supervision of all firms

The ABI is also proposing a new regulated sales process called "Assisted Purchase" that aims to "match consumers with products that meet their basic needs" and give greater number of people affordable access to financial products in a way they can easily understand. Included within this should be simple protection products.

Talking about the submission, the ABI's Director of Life and Savings, Maggie Craig said:

"The system of paying for financial advice needs to be improved. It is in the interests of customers current and potential, advisers and product providers to raise standards of service and professionalism, and to be clear about what advice is and how it is paid for.

"The insurance industry will continue to work with the FSA and others throughout 2008 as it considers all the ideas the FSA has received and puts in place final recommendations. We are confident that together we can build on the Discussion Paper to develop constructive proposals.

"We will require a strong partnership between the industry and the FSA to ensure that they are implemented."

The FSA's Retail Distribution Review was launched in June 2006 to look at the problems in selling financial products and to find a solution that is fairer for both providers and customers.

The ABI's submission can be viewed by clicking here.