The recent hysterical Consumer Focus “pension churning” report and Ivan Massow’s new business plan have put the issue of trail commission firmly into the public gaze.
In the run-up to the introduction of the retail distribution review and with the FSA on the look-out for a potential commission closing-down sale it was always likely that trail commission would be the focus of consumer media scrutiny.
A range of regulators past and present have failed to attach a specific purpose to the payment of trail, with some advisers agreeing with clients that the remuneration method is an alternative to higher up-front commission and others agreeing the payment comes with specific ongoing service responsibilities.
The BBC’s Money Box programme reference to trail commission as one of the industry’s “best kept secrets” has angered many advisers who believe there is nothing secretive about the service they offer.
But rather than focusing on one comment in an otherwise decent examination of Ivan Massow’s new venture, it is the relentless media attacks on IFAs based on little evidence that continues to create so much anger.
Take the widespread “cut and paste” reporting of the Consumer Focus report on pensions which accused IFAs of widespread misselling using insignificant sample sizes to try and back up its claims.
The front page of the Daily Express earlier this week bellowed that “Millions may be victims of ’rip-off’ financial advisers”, alongside a front-page splash suggesting that pension pots are being slashed by 75 per cent.
The article was based on a report from the thinktank Civitas which offers a pension history lesson touching on 1990s’ misselling and the FSA’s 2008 FSA Sipp concerns but no evidence of IFAs “ripping-off” clients.
Journalists and the thinktanks or quangos behind such stories give little thought to the harm done to those turned off saving by ill-informed articles.
Try a new tone
The Advertising Standards Authority may have found the controversial Money Advice Service advert did not break its rules but we stand by the view that the tone and language used created a dangerous misconception about the value of advice. We hope the MAS will forge a more productive relationship with the people who pay its wages in future.