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PFS sees hope for independent label

The future of independence is not as challenging as the industry had been led to believe before the RDR reforms came into force, Keith Richards has claimed.

The chief executive of the Personal Finance Society also said that the consumer benefit of advice labels was unclear at best and would become more questionable if advisers move to a restricted whole of market proposition.

He said: “Maintaining an independent status is not necessarily as challenging as many had predicted in the run-up to RDR but firms need to satisfy themselves that they are complying with the new rules.

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“Since the recent publication of initial post-RDR findings by the FCA, an increasing number of advisers have stated that they remain open minded but may move to restricted to avoid the risk of future compliance - although the majority believe they will retain a whole-of-market proposition.

“The consumer benefit of advice labels has become less clear since depolarisation and is questionable as to their relevance if we see more advisers move to a ‘restricted whole-of-market’ status.”

The PFS, which has more than 32,000 members in the advisory space, said it had always sought to help members who are either restricted or independent, without advocating any particular practice.

In its 22-page professional direction paper, Independent & Restricted Advice, updated earlier this year, the PFS said: “As a professional body with members drawn from across the adviser community, the PFS has no set agenda other than to provide members with an improved understanding of the new rules.”

This followed huge debate in the run-up to the implementation of RDR on 1 January as to whether the majority of IFAs would go restricted or remain independent.

This comes as the PFS announced it had seen a sharp rise in the number of advisers seeking to differentiate themselves from the regulator’s QCF Level Four standard for advice.

According to the PFS, there has been a 19 per cent increase in Chartered Financial Planners during the past 12 months with the total now standing at 3,758, as at 31 August 2013.

There has also been a 25.7 per cent rise in Fellowships during the same period with the total number now at 1,417 FPFS professionals.

Trade Body view

Chris Hannant, director-general of the Association of Professional Financial Advisers, said: “I agree. Labels are not much help as they do not mean much to consumers. If a label does not tally with common sense meanings then consumers will not understand what they are getting and there won’t be transparency. What is the most important thing is that the consumer understands what kind of service they can expect, and that they get it.”

Figures:

75% of members are practising advisers, 7% paraplanners, 5% compliance

Total PFS membership stands at 34,079

At the end of 2012, 64% said they had decided on independent, 14% restricted and 10% a hybrid model. At that time 10% were still undecided.