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Consumer confusion over financial advice

One year on from the radical shake-up of the financial advice market unleashed by the FSA through depolarisation, new research from IFA Promotion has revealed worrying signs that 84% of UK adults still don't understand the different types of advice now available, writes Richard Eagling.

The findings come at a time when the concept of independent financial advice appears to be more popular then ever, with 90% of people claiming that seeing an 'independent' adviser is important to them. Meanwhile, 95% believe it is important that the adviser can recommend the most suitable products from the whole of the market; with 88% claiming it is crucial that an adviser has no commercial ties to product providers. However, the research makes clear that what people want is not what they are actually getting. Of the 6.6 million people who saw an adviser in the last 12 months, 72% believe they saw an IFA, just 10% think they saw a multi-tied adviser and 13% believe they took advice from a tied adviser.

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David Elms, Chief Executive of IFA Promotion, commented: "Our annual research confirms that nearly twice as many people end up taking advice from a bank or building society as see an IFA, although most clearly prefer the concept of independent financial advice.

"The FSA introduced the biggest changes to the financial advice market for sixteen years to offer clearer choices and make it easier for people to shop around. However only 27% of people who have taken financial advice in the last year actually feel they know the difference between the three different types of advice. Given this widespread confusion, there has never been a more important time to relay to consumers the benefits of seeking whole of market, independent financial advice, and most importantly, how to find it."