The bulk of more than 2,400 insurance intermediaries who have registered with the Central Bank for authorisation have chosen the Restricted Activity Investment Product Intermediary (RAIPI) category. Some 33 per cent have registered for the level of Authorised Adviser (AA).

The argument over which type of intermediary gives the best advice is not as simple as five letters bad, two letter good. An AA is the closest thing the Irish market has to an independent financial adviser, but an RAIPI is perfectly capable of sourcing the best product from a broad base. What is important is that the customer understands the type of firm or adviser they are dealing with.

The scope and range of investment, pension and insurance products continues to grow in an ever-changing environment and increasingly people are seeking reliable advice. Family Money has asked two intermediaries in opposite camps, Mr Liam Ferguson and Mr Alan Morton, to explain why they chose their respective categories.

So what has brought about this change in the way advisers and brokers are defined? The Insurance Act 2000 gave the Central Bank responsibility for regulation in this area from April 1st, 2001. The bank contacted all insurance intermediaries in April, inviting them to register with or apply to the bank to do business under one of three categories:

Restricted Activity Investment Product Intermediary (RAIPI): This is the first level of authorisation and 64 per cent of insurance intermediaries have opted for this category. It covers the receiving and transmitting of orders in investment and insurance products to product producers from whom the intermediary holds letters of appointment. RAIPI firms can provide advice only on instruments available from those product producers.

Authorised Advisers (AA): They provide similar services to restricted intermediaries but are authorised to advise on a more extended range of products without having to hold a letter of appointment. This allows the intermediary to provide advice on the entire investment and insurance market.

Applicants for the AA category were required to have £10,000 on deposit, a condition that proved to be an obstacle to some smaller operators.

Authorised Cash Handlers (ACH): A small number of intermediaries, 3 per cent, will do business in this category. An ACH can provide the full range of insurance and investment advice, including cash handling and own account trading. All intermediaries will be required to display and explain their status clearly to clients. It is up to the consumer to decide which category suits their needs at a particular time.