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Consumers waking up to 'restricted advice'

The UK IFA Centre has spoken out about the impact of the Retail Distribution Review – the British government’s FOFA equivalent – on changing consumer sentiment, claiming a growing focus on ‘independent advice’.

In a web broadcast with Morningstar UK, IFA Centre founder Gill Cardy, an independent advice activist, said consumers awareness is increasing.

“I think it’s fair to say that from a lot of the research that consumers haven’t always understood what sort of advice that they’re getting and I think a lot of consumers who aren’t absorbed in the world of personal finance don’t always understand what the implications are,” she said.

“But when they do understand what restricted advice means—that the costs might be higher, that there might be products that an adviser isn’t considering and solutions that aren’t available—then they do understand why independence is important and that an independent adviser can give them a full range of solutions.”

Cardy also rejected the common perception that the RDR has made running an “unrestricted” advice practice more difficult, as the core functions of financial advice work will remain the same.

“Advisers will still have to do all of those jobs that we have to do—fact find, risk profile, financial plan, consider the options, write suitability letters, do reports, keep compliance records—all of that is still important for everybody.”