Vincent Cable

The Liberal Democrats have warned against plans to ease the laws governing financial advisors.

The party released new figures obtained from the government which show the majority of complaints to the financial watchdog were about financial advisors tied to particular firms.

It claimed on Wednesday that 50,436 out of a total of 59,710 complaints in the last two years to the Financial Services Authority were about advisors employed by specific investment companies.

Out of those, a massive 89 per cent were upheld.

The Liberal Democrats also highlighted that complaints upheld against tied agents were 80 per cent higher than in 2002.

The FSA is currently reviewing the rules governing financial advisors with a process known as depolarisation.

Deciding which mortgage, pension or ISA has become big business for advisors but rogue firms often fail to make clear they are linked to only a few firms.

They fail to disclose that they are not offering the full range of products and services available or that they are paid commission by the banks and pensions they are tied to.

To counter the conflict of interest the FSA has admitted it must bring the industry to heal but some sections of the industry say it is not doing enough.

"Whilst clarity of disclosure documents is vital, these are simply pieces of paper which can easily be overlooked - people need to know how to tell the difference between types of advice, and this will be the true test of success for the FSA's proposals," said the Independent Financial Advisors group.

The Liberal Democrat's DTI spokesman, Dr Vince Cable said the figures revealed by the party showed any attempt to ease the rules would be open to abuse.

"With this level of complaints, it is utter folly for the government to drive customers into the arms of tied advisers. Some tied advisers are clearly wolves in sheep's clothing," he said.

"Consumers should be extremely alarmed that the Financial Services Authority is insisting on removing the rules which govern the independence of Financial Advisers. If the FSA is to go ahead, it is imperative that a network is created providing high quality, independent generic financial advice."