Aifa has urged its members to support its stance that trail commission should continue to be paid until a product matures or is terminated in their responses to the FSA’s legacy assets consultation paper.
In its legacy paper in November, the FSA confirmed it does not intend to remove or relax the ban on legacy commission, despite widespread industry opposition. It defines legacy commission as additional commission that may become payable on legacy assets where there has been a change or addition to the product or investment post RDR. The paper also published a table setting out a range of scenarios which it says would amount to advising on investments.
However, Aifa says there is still some confusion about the triggers for ending trail commission on a product.
Aifa director general Stephen Gay (pictured) says: “At present it is not clear what precisely constitutes termination of a product and what is merely switching within a product. It is therefore extremely important to make the case in response to the consultation that switching investments within a packaged product does not terminate the product.
“Aifa strongly believes that a distinction should be drawn between switching within a packaged product and switching between products. If switching leaves a product intact and fundamentally unchanged, for example after rebalancing within a pension, we believe that trail commission should continue because that product sold pre-RDR remains.”
Responses to the FSA’s legacy commission paper are due by January 16.