Consumer Panel research, published to coincide with the FSA's annual public meeting on 21st July, shows that many consumers don’t know what their advisors offer or how they pay them.

The main findings are as follows:

• Consumers are confused about the services they get from advisers – even when questioned before the recent changes to the rules on the numbers of firms advisers can represent (known as ‘depolarisation’). Almost a third (29%) thought that their ‘independent financial adviser’ was only able to advise on a restricted range of companies’ products.
  
  
• There was also confusion about paying for advice: 20% of those who had used an Independent Financial Adviser did not know if or how they had paid them.. Although fees are starting to be paid: 12% of people who bought products regulated by the FSA said they had paid fees for advice.
  
  
• However, customers value the idea of independent advice. 62% thought they had had very good advice from an adviser who covered the whole of the market, compared to 20% of those who had used advisers tied to one company.
  

Other findings highlighted in the report are as follows:

• Fewer people are buying products linked to the stock market - only 9% of consumers had bought investment products in the previous 12 months, compared to 14% in the 2000 survey.
  
  
• People do not shop around for financial products: 56% only got a quote from one company before buying, while 33% neither shopped around themselves nor used a broker to act on their behalf.
  
  
• The use of internet shopping is growing, but purchases are still largely made face to face, with many consumers heavily reliant on financial advisers. Half the purchases were made after taking some form of financial advice, with one in eight people leaving the choice of product completely up to their adviser.
  
  
  Chairman of the Consumer Panel, Ann Foster, said:
  
  "This highlights the big challenges in getting the right messages across to consumers. At a time of major change in the way that financial advice can be given, the FSA and the industry must ensure that consumers are aware of how they are paying for their advice, and whether people are tied, multi-tied or independent in the advice they are giving. The FSA's Key Facts initiative is a good start. But the FSA and industry must promote it properly and evaluate its effectiveness."

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