There is an interaction between regulation, the range of products supplied and the distribution channels employed by providers. The commercial need for product providers to differentiate their products from one another and from their competitors' products has resulted in products that are complex and difficult for consumers to understand. Most consumers are not sufficiently well informed to buy the more complex investment products without specific advice or to shop around for specific advice. To overcome this the FSA is already considering how to implement the remit proposed for it in the Financial Services and Markets Bill to promote understanding of the financial system. The Director General concluded in his report Vulnerable Consumers and Financial Services, that large numbers of low income consumers are excluded from access to investment products by the need for specific advice.
Consumers choose a financial adviser they feel they can trust.
Some put their trust in a brand name and approach a tied adviser. Others prefer independence and trust their IFA to recommend a particular provider. Four years of research by the PIA on persistency rates shows that consumers are more likely to persist with a policy bought through an IFA than one bought through a company representative. It is difficult to allow for differences in the types of consumer using IFAs and tied advisers, but this evidence does suggest that the advice from an IFA might be more appropriate to the customer than advice from a company representative. Product providers compete to have their products included in IFA network recommended lists or IFA product panels.