To polarise or not to polarise

Polarisation has been an integral part of how the retail financial services market operates in the UK, since its implementation in 1988. The term ‘polarisation’ refers to the practice whereby financial advisers must belong to one of two groups: either independent advisers able to advise the consumer on a range of financial services products, or tied agents who can only advise on the products of one company. In this paper, the author first sets out how the process of polarisation was implemented, before going on to consider the impact of the current two‐stage review by the Financial Services Authority (FSA) of competition in financial service provision. He argues that while some change in the retail financial services market would be helpful there are considerable dangers in the FSA’s clear recommendation that polarisation should be abolished.