§ Mr. FlightTo ask the Chancellor of the Exchequer what effect the defined payment system as outlined in the Financial Services Agency's polarisation paper will have on the number of independent financial advisers. [32902]
§ Ruth KellyThe FSA consultation paper analyses the likely impact of these proposals on the IFA sector at paragraphs 4.19 to 4.21.
It concludes that the IFA sector would be likely to shrink to some extent. This does not mean that these firms would go out of business, as existing IFA firms who do not want to move to the defined payment system proposed by the FSA would be able to operate as they do now, expect that they would not be able to hold themselves out as independent. This outcome also needs to be seen in the context of the current market where 80 per cent. of mass market consumers buying packaged products use the non-IFA or tied sector. These consumers should benefit from increased choice under the FSA's proposals.
The FSA consultation exercise closes on 19 April.