Study Discovers Many UK Consumers in the Dark about Financial Advice Fees

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21st December 2012 16:32 - Financial Services

 

A survey of more than 2,000 Britons on behalf of the Financial Services Authority (FSA) has revealed wide-spread ignorance amongst consumers about financial products and advice.

It was discovered that as many as 49% of those surveyed who had received financial advice were unaware that they faced a potentially significant fee through commission payments to their adviser after purchasing a financial product.

Almost a third (29%) of UK consumers who took part in the market research understood that they would pay a price for the financial advice they received, however a third (33%) who do not currently receive financial advice mistakenly thought that it comes free of charge.

In order to eliminate this prevalent misconception that financial advice comes free and also to encourage Britons to shop around for the best prices, the Government is issuing in major changes starting 1 January - the practice of advisors charging customers through commission will be banned, and financial sales people will have to agree a fee in advance with their clients after a fact-finding process.

The FSA commented: "In response to the survey's finding the FSA has put the record straight by pointing out that advice has never been free. Consumers have always paid for the advice they receive, but they often didn't understand the mechanism through which they paid for it."

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