The independent and restricted status is not working, and the ‘tied’ and ‘independent’ distinction should be brought back, David Carter has said.
The independent financial planner at Devon-based Jigsaw Financial Solutions said the restricted status was “derogatory and belittling”, as only an independent adviser can advise on existing products and strategies.
However, he said putting ‘tied’ back in place would make it much clearer to the public as to what advice they were getting.
He added: “No adviser should be obliged to sell products from a restricted range of providers and nobody should be permitted to restrict individual advisers.
“With that in place, we would all be IFAs and could act and be treated professionally.”
Mr Carter added that since the RDR he had become “more frightened” about retaining his independent status, as there were “hurdles to jump, with requirements to be compliant in areas unlikely ever to be relevant to the kind of client I attract, and to what useful purpose?”.
Anthony Badaloo, financial adviser at London-based Church Hill Finance, agreed that the restricted status could be problematic. He said: “Products are always evolving and being restricted. They can block consumers from receiving appropriate solutions to their needs.
“What about existing products in a client’s portfolio? With restricted status, how can you give advice? Most people just want help and advice with mortgages, pensions and Isas. The regulator needs to consider the human and social aspects.”
A spokesman for the FCA said: “The terms are simple and clearly describe the nature of the advice that people get. As part of the disclosure process, firms should tell consumers whether they offer an ‘independent’ or restricted service, making clear what that means. We have made it clear we do not have a preference whether advisers offer an independent or restricted service.”
John Cowan, Sesame Bankhall Group’s executive chairman, said: “The old product-based proposition was right for its time.
“The new value proposition is professional advice, not product. Some clients will need full-range advice; others much less. It’s not about the label on the door. The radical pension reforms will increase the need for the UK population to seek out well-qualified advisers who can provide them with a fit-for-purpose, competent service. This can be delivered through either advisory set.
“As a profession, we should unite behind a common cause – the delivery of professional financial advice – and not argue among ourselves about something that is unimportant to clients. The debate is becoming sterile and I believe we are in danger of missing the point.”