An IFA has changed his proposition from being purely independent to offering a hybrid of both restricted and independent advice, claiming that compliance demands are too rigorous to remain independent.
An IFA, who wished to remain unnamed, was previously offering purely independent advice but will now offer the option of restricted advice as well and has not ruled out eventually becoming purely restricted.
He said: “We are now on the verge of going restricted for a number of reasons. The main reason is compliance. I don’t see how anybody can be 100 per cent compliant when independent. The paperwork is increasing as we [as an independent adviser] have to look at all the products and discount them and document why they are being discounted etc.
“Essentially, it’s now a documentary evidence process about which companies you pick as well as the products.
“I think that 99 per cent of independent advisers will go restricted or to a hybrid due to the over-regulation. There is too much risk for all the compliance we have to do. It’s getting to the stage where you will have a wheelbarrow of paper before you get to do any business.”
One reason why the firm has decided to offer both routes to clients is due to local authorities only recommending independent advisers for long-term care advice.
The Care bill states that those looking for long-term care must be shown “how to access independent financial advice on matters likely to be relevant to adults who have needs for care and support or are making plans for meeting needs for care and support that might arise”.
He said: “One of our guys did the long term care exam and local authorities must only recommend to IFAs so we will keep the door open for him on that.
“Otherwise [for the restricted proposition] we will select a number of providers to work with. We are currently working through this.”
The adviser also said that he does not believe that clients care whether firms are restricted or independent.
He said: “The question never generally comes up. I would just say I am a financial adviser and then we deal on a restricted basis and we will explain what it is.
“We will be running a hybrid business of both restricted and independent. Most people don’t care. Why did direct sales forces do so well for so long?
“There is too much paperwork involved for independent advisers. There is a lot of documentation involved and then you are still not safe as you are trying to give yourself a watertight bureaucratic system that is impenetrable by the regulator and it is impossible – totally and utterly impossible.”
