The FSA has hinted that financial advisers could be forbidden to call themselves “independent” if they earn commission from financial products.

According to the FSA’s review of the sector, commission-based sales could lead to “consumer detriment” shorthand for mis-selling.  

One well-known consumer group said: “There is an inherent conflict of interests in commission-based advice which can result in people being sold financial products that are not necessarily right for them.”

The FSA’s report to some extent endorsed this criticism and said: “Product providers often remunerate advisers, and there can be a mis-alignment of advisers’ interests and those of consumers, adding to the risks of consumer detriment.”

David Elms, chief executive of Independent Financial Advice Promotion (IFAP), said: “I welcome the FSA report and measures that ensure there is no conflict of interest between the consumer and the adviser.”