Commission rethink on protection sales
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The FSA says advisers will not have to disclose commission on protection sales where an adviser charge has been agreed more than a year before the sale.
The final rules on pure protection sales state that if an adviser charge has been agreed more than 12 months before the protection sale, then the sale is unlikely to be associated with investment advice.
If the protection advice was given less than a year after an adviser charge, the adviser will have to make a judgement call as to whether it was an associated sale and, if so, fully disclose commission.
The FSA has brought in the requirement to disclose commission to avoid confusion about what the adviser charge covers.
The draft rules called for advisers to disclose commission if they were “likely to agree” an adviser charge in the future. Respondents felt this would be difficult for firms to judge.
As a result of industry feedback, this has been changed so the rules apply if a firm “agrees an adviser charge”.
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