In its Consultation Paper 121, the regulator discussed potential ways to help consumers compare the cost of financial advice. The FSA's objectives were:
- reducing the potential for commission bias
- making consumers more aware of the cost of advice; and
- facilitating shopping around by consumers.
The "Menu" is envisaged as a document provided to consumers in the early stages of the sales process. It would set out:
- An outline of the services the adviser is offering
- For independent advice, the option of paying by fee and a fee scale
- Where offered, the option of paying by commission and, for a range of popular products, the commission that the adviser normally charges, set alongside average rates charged in the market.
David Severn, Head of Retail Projects at the FSA, said "We want to help consumers be more confident about the advice they are receiving, to know what they're getting for their money and compare one adviser with another.
"Some constructive proposals came forward in the responses to CP121 and, of those, the "Menu" option offers the best route for us to achieve our objectives. Importantly, it will ensure that the form and level of adviser remuneration - and scope for negotiation - is signalled to the consumer 'up front'."
The FSA will make a further announcement on the outcome of its consultation on the reform of polarisation before the end of the year.