Advice rules could be tied up in red tape

NEW rules on the distribution of financial services products aimed at benefiting the consumer could be hampered by red tape, it has been claimed.

MPs are to address concerns over the standards of advice offered by financial advisers, particularly that bureaucracy could take over to the detriment of customers.

A debate on Monday in the House of Commons will highlight the challenges these new rules, introduced through the Retail Distribution Review, will bring to the sector.

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The Financial Services Skills Council (FSSC), while generally supportive of the changes, warns that the focus should be on benefiting the customer and is worried about an increase in red tape in an already "legislation heavy" industry.

Sarah Thwaites, director of the FSSC, said: "The danger is that if too few existing advisers meet the new qualifications level, or the industry does not find it cost-effective to offer advice to the mass market, the very important aim of achieving good consumer outcomes may be lost."

The FSSC, with the City watchdog, the Financial Services Authority, acting as an observer, is working to encourage best practice and improve standards.

Thwaites added: "Whilst generic technical knowledge is an important strand of competence, the ability of the individual in terms of the skills needed to undertake the role and the ability to apply their knowledge in practice are equally if not more important."