David Prosser: Financial advice is far from friendly

Don't be embarrassed if you missed it, but on Wednesday Britain's chief City regulator made the most fundamental changes to the laws on financial advice for almost 20 years. But while the Financial Service Authority (FSA) reforms almost certainly passed you by, not helped by the package's snappy moniker - "depolarisation" - they will have a significant impact on the financial advice you receive, and what you pay for it.

At the heart of the new rules is a new type of financial adviser. Since 1988, advisers have either had to be totally independent, selling the products of every provider in the financial services market, or tied to just one company, offering only its wares.

The FSA has long believed this system is bad news. Most people never get round to seeking out an independent adviser, the regulator argues. Instead, they pop into their local bank or building society to ask for financial guidance and are sold its products, however poor they may be.

Enter the multi-tied adviser. Since Wednesday, advisers have been allowed to work with a handful of product providers. So your bank will now be able to sell pensions, say, from a small group of specially-selected companies.

That sounds sensible, but there are major flaws in the new system. Not least, most multi-tied advisers will work at big banks or through national networks and providers will be desperate to get on their panels because they know they are a rich source of business. This means the advisers can ask them for fat commissions - and consumers will end up swallowing the costs.

Another problem is confusion. In the past, many consumers have not appreciated that independent financial advisers are very different to tied agents. Now there will be a third option. Multi-tied advisers will even be able to work with different sets of product providers depending on what they're selling - one group of companies for pensions, say, and a completely different one for life insurance.

Above all, however, the new system is a cop-out. In an ideal world, consumers would be prepared to pay for good quality financial advice from an independent company, in the same way as they pay lawyers and accountants, for example. But rather than finding a way to improve the standing of independent financial advisers, the FSA seems to be giving up on directing more people towards genuinely impartial advice.

It's common sense that you get the best deal from a professional adviser who has access to every product on the market, as long as he knows what he's doing.

It is also blindingly obvious that as long as advisers earn their living by taking commissions when you buy financial services - even if they declare them very openly - people will never be confident they're not being ripped off.

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Happy Tax Freedom Day for last Tuesday. The Adam Smith Institute think-tank says the British population is now finally working for itself - every penny earned until May 31 was needed to pay the year's total tax bill.

However, many people may be celebrating prematurely, because most of us pay far more tax - £133 a year on average, says one analyst - than we need to.

There are all sorts of simple steps that will reduce your tax bill. Use your tax-free savings allowances, such as ISAs and private pensions, get your tax return in on time and make sure you are taking full advantage of personal income tax allowances. Even giving money to charity reduces your tax bill.