CP 04/3 on depolarisation

Background

The FSA announced in autumn 2002 that it had decided to proceed with the removal of the polarisation restrictions and would be developing the so-called "menu" approach. Rational of menu is to:

• reduce the potential for commission bias;
• facilitate shopping around by consumers and
• make consumers more aware of the cost of advice and the payment options open to them at an early stage in the sale process.

Consultation Paper 04/3 (CP)

The CP:

• explains in detail the FSA's menu proposals;
• explains the FSA's proposed final depolarisation measures and associated rule changes; and
• contains in the Appendix the Depolarisation Instrument which contains the full set of changes to the FSA Handbook needed to complete the depolarisation process (it therefore includes the changes needed to remove the polarisation restrictions, first published in CP 166, as amended to take account of the feedback received. In addition it includes for the first time, the new rules and guidance needed to bring the menu into operation).

Timetable

• Consultation will close on 1 June 2004. The FSA expects to publish the policy statements in the second half of 2004, when the final rules will also be published.
• The FSA proposes to make all the rules for depolarisation and the menu at the same time. Firms will then have a 6 month transitional period, at the end of which all firms need to be in compliance with the new rules.

For more information on the "menu proposal" click here. For more information on the "amendments to the draft depolarisation rules since CP166" please click here. For information on the "timetable and transitional arrangements" please click here.

If you require further advice or information on any aspects of the CP or on the depolarisation proposals in general please contact Simon Morris at [email protected] or on 0044 (0) 207 376 2702.