Firms offering restricted advice are spreading "propaganda" about the apparent difficulties of meeting the Financial Services Authority's (FSA's) new independence rules, according to consultant David Severn, a former head of investment business policy at the FSA.
Severn, also previously a director-general of the Association of IFAs (AIFA), and now of David Severn Consulting, made his comments in a submission to the Solicitors Regulation Authority (SRA), which is consulting on whether to permit referrals to restricted advisers.
He claimed the SRA was being ‘hoodwinked' into thinking that allowing restricted referrals, to reflect the changing statuses brought about by the Retail Distribution Review (RDR), would help it to meet its outcomes-focused approach.
In his detailed submission, he explained why most firms which are currently independent should be able to maintain that status, pointing out they already have to deal with most of the prescribed investment areas.
Severn added: "There is a good deal of industry propaganda about the alleged difficulty for investment advisers remaining independent after implementation of the RDR but in my opinion it is often generated by those who want to justify their commercial decision to restrict their service in future rather than from any genuine regard for the interests of existing or future clients."
The SRA's preferred option in its consultation is to allow solicitors to make referrals to restricted advisers.
Severn, who is currently a non-executive director at IFA Centre, also criticised the FSA for not doing enough in the past to make sure firms did not mislead consumers over their status.
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