Andrew Fisher hits back in trail commission row
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Towry Law chief executive Andrew Fisher says advisers who keep advising clients while receiving trail commission from providers are breaching treating customers fairly principles.
Fisher, who has been a vocal critic of commission but last week admitted his firm takes £6m in trail commission every year without offering ongoing advice, says life companies use trail commission to incentivise IFAs to keep clients in their products.
In an interview with Money Marketing, he says: “The whole purpose of trail commission today, if it is not a deferred up-front commission, is to increase persistency. If someone is incentivised to keep a product with a client then that would be in breach of TCF principles.
“If anyone is saying that they are taking this trail commission and using it to pay for servicing of clients then they would be in a serious position. I would argue at that point the actual breach of TCF principles is with the life company because they are basically incentivising an independent agent not to act independently.”
MoneyMarketing.co.uk was flooded with comments last week following Fisher’s admission that Towry takes around £6m of trail commission annually from 300,000 clients it cannot identify.
But Fisher says: “I’m surprised that anyone said on your website ‘why isn’t he servicing his clients with that trail commission?’, because legally I wouldn’t be allowed to.
“Clearly the industry has got it horribly wrong if they think trail commission is there to service clients. It is so wrong it is extraordinary.”
Fisher adds that where trail commission is paid, the client is a client of the life company, not the IFA.
He says: “If you take us for example, all of the clients who were clients of various life companies in the past were introduced by previous Towry Law advisers to those life offices and they were paid deferred commission. They are not Towry Law clients, they are all clients of the life companies and the fund management houses and we couldn’t possibly use any trail commission that came out of that to service clients or rebate clients.
“If any client is given advice by us now, the first thing we look at is were any products sold to that client by us in the past and immediately any trail commission or any commission associated with that client stops because we are advising them and we would not take trail commission on that basis.”
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Readers' comments (88)
Anonymous | 16 Nov 2009 9:46 am
a case of he wants his cake and eat it. If he doesnt believe in the trail and he doesnt service the clients why doesnt he just switch it off.
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Anonymous | 16 Nov 2009 9:46 am
Words fail me!
Is Fisher living on a different planet to the rest of us?
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Anonymous | 16 Nov 2009 9:50 am
The situation is simple.
Last week Mr Fisher [inadvertently] admitted that despite all of his arguments in the past his company receives significant commission payments.
This argument re TCF is therefore a tactic to divert attention away from the simple fact that based on this new information his position is, quite simply, indefensible.......
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Anonymous | 16 Nov 2009 9:50 am
If those clients are the life companies then should Towry Law be sold I assume those clients would not feature in the valuation of the company?
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David Wilson | 16 Nov 2009 9:51 am
I agree with anon - why does he not return the money. But I am not sure exactly where he is coming from - surely it is incumbent upon advisers (under TCF) to offer a regular review of holdings and to receive trail commission pays for those reveiws. It is much better to give the service and be paid for it than receive the money and do nothing!!!
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Anonymous | 16 Nov 2009 9:53 am
Unfortunately it is people like Mr Fisher that cloud the whole market principles. These statements clearly illustrate that Towry Law clients are really given a raw deal. Charged for advice, sold to, renewal commission paid on top but for nothing, and loss of client contact.If that is what the FSA strives for then consumers are doomed
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Dathan Steele | 16 Nov 2009 9:54 am
The very concept of taking advice on TCF (or indeed anything else!) that someone who will be currently busy getting his 'advisers' to churn any profitable portfolios from EJ into the wonderfully ['cheap'!] TL FoF's is laughable......
The rantings of Fisher used to wind me up, now I think they are '....a tale told by an idiot, full of sound and fury, signifying nothing. '
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Alan Lakey | 16 Nov 2009 9:54 am
The FSA has long stated that a lack of peristency was one of the indicators of a faulty advice process.
Also, the remuneration strategies of advisers is sufficiently flexible that a mix of up front commission and trail can be taken.
Some take 5% and no trail others 3% and 0.50% p.a. In this instance the trail commission has nothing to do with ongoing servicing as it reflects the initially agreed method of remuneration for the advice given at outset.
As is often the case, Mr Fisher's arguments are long on rhetoric and short on factuality
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Robert Parker | 16 Nov 2009 9:55 am
Why do people criticise and remain anonymous?
So Dear 9.46 a.m. Anonymous - because it is 6 MILLION POUNDS....
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Dermot Brannigan | 16 Nov 2009 9:56 am
Have I read this right? It's ok to take money from a clients policy when you're not doing anything to 'earn' it.
But it's 'illegal' to do service a policy you're being paid for?
Is this guy attempting to become the new Peter Hargreaves?
Somebody please find him something to do
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