Towry Law takes £6m trail commission without servicing clients
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Towry Law has admitted it takes up to £6m annually from 300,000 clients it no longer offers advice to in the form of legacy trail commission.
Source: Michael Walter/Troika
Chief executive Andrew Fisher, who has been outspoken in his criticism of commission-based advisers, says he has no idea who the clients are, but argues that it is right for Towry Law to continue taking the payments until the contracts expire.
He says: “These are clients who bought products from Towry Law up to 25 years ago before we owned them. I have no idea who they are but it is perfectly acceptable for someone who buys a business that has historical agreements in place to honour that. It is not acceptable to work that way on new business, but the trail commission is part of the value of the business being bought.”
Fisher points out that the RDR allows firms to continue to take trail commission on legacy business.
He says: “It is not physically possible to trace back who these clients are and in practical terms it is not possible to turn the commission off. We will continue to take the commission until the contracts run out.”
Towry Law has seen a pre-tax loss of £10.6m for the year ending December 31, 2008, plummeting from a profit of £812,000 in 2007. Fisher said the fall in pre-tax profits is due to significant investment in the company’s infrastructure. Revenue for 2008 stayed level at £49.1m.
In October Towry bought the UK subsidiary of the US adviser and investment firm Edward Jones for just £1.
Edward Jones, which has 400 financial advisers and 50,000 clients with £1.5bn of client assets, made a loss of £35m last year.
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Readers' comments (63)
Spin-Doctor Exposing Team | 10 Nov 2009 1:33 pm
Who are you trying to fool Fisher?
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Anonymous | 10 Nov 2009 2:20 pm
It is actually nearer £10 million
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Anonymous | 10 Nov 2009 2:39 pm
The true hypocrite is the one who ceases to perceive his deception, the one who lies with sincerity. ~André Gide
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Anonymous | 10 Nov 2009 2:39 pm
No wonder IFAs are seen as unprofessional money grabbers - you never see a poor IFA - even the thinck stupid ones are able to work out how to cream cash from clients.
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Anonymous | 10 Nov 2009 2:39 pm
So much for all that sanctimonious "holier than thou" rubbish Mr Fisher. You are just the same as the rest of us....... funny that!
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Anonymous | 10 Nov 2009 2:41 pm
The FSA should act on this immediately, without exception. They should either:
- demand TL write to each client to explain that they are receiving trail and why
- forbid TL from taking the trail until they prove that they are earning it
- obtain TL's commission records and write to the customers themselves to explain the situation
This would not only prove to consumers that the FSA is trying to look after their interests but also prove to the industry that the FSA is serious about the RDR and treating customers fairly.
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Anonymous | 10 Nov 2009 2:42 pm
So, in Andrew Fisher's world taking trail and servicing a client is unscrupulous and represents everything that is bad about the industry, but taking the trail and doing sweet FA is fine!!!
That statement the providers send you every month with a policy number and a client name with a trail amount next to it might give you a clue to finding out who these people are.
This is not TCF !
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Anonymous | 10 Nov 2009 2:49 pm
No wonder the public don't trust financial advisers to put their interests first! How can it be acceptable to be remunerated for doing nothing whatsoever. Disgraceful.
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Matt Timmins (Simply Biz) | 10 Nov 2009 2:50 pm
Those in glass houses…….
After all the ‘holier than thou’ rubbish spouted out by this firm and Mr Fisher in particular I am glad that Money Marketing has exposed them for who they are.
My advice to Towery Law would be to get your own back yard in order before you cast aspersions on the wider IFA community.
We always knew you were talking rubbish about only charging fees and now we know it……busted!
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Anonymous | 10 Nov 2009 2:51 pm
Well, well, well.......wellity, wellity, wellity.... with commission of that scale for doing diddly squat, I'm surprised you can be bothered getting out of bed in the morning Mr Fisher. Better get the polish out, your halo and pedestal are looking a bit grubby. TL=TCF???
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