The Treasury Select Committee on Tuesday urged the UK's Association of Independent Financial Advisers (AIFA) to establish a code of ethics for its members, arguing that the relative absence of self-regulation in the industry sometimes leads to "unacceptable" practices.
In a report looking at ways to restore the faith of the UK public in long-term saving, the Select Committee laid a large portion of the blame for the drop in confidence on commission payments for IFAs which could lead them to oversell unsuitable, but high-charging, products to clients.
The report also found that the absence of a self-regulation system or code of ethics means that there is a “danger that companies and trade bodies are abrogating their responsibilities in relying so heavily on the Financial Services Authority to police and deliver good standards of behaviour”.
The AIFA has pledged to examine the proposals put forward by the Select Committee.
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