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FSA set to probe restricted advice panels

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The FSA is set to probe the way distributors compile their restricted advice panels in the lead-up to the RDR, Money Marketing understands.

It is understood the FSA has been in regular contact with firms on the issue and may conduct a thematic review to ensure its guidelines are being followed.
Tenet distribution and development director Keith Richards says a number of networks are charging for a place on their restricted panels.

He says: “Tenet does not take money from providers although there are a few in the market that do. Tenet is unlikely to charge providers to be part of a panel but it is possible that commercial considerations will be discussed which may translate into lower charges for the client.”

Openwork proposition and marketing director Philip Martin says: “We do not charge providers to be on a panel. We will naturally wish to engage with providers that do sit on the panel to develop joint marketing initiatives but there is no charge to appear.”

Intrinsic and Origen say they do not charge providers to be on any panels. Honister Capital says it does not currently operate any restricted panels.

Sesame, Lighthouse, Paradigm and Positive Solutions declined to comment.

In November, Money Marketing revealed product providers were paying significant sums to distributors as part of long-term distribution deals arranged ahead of the RDR. An email seen by Money Marketing outlined details of a £2m payment from Aegon to Caerus for “sales and marketing activity to support our partnership”, although Aegon suggested this figure did not represent the final deal.

Quainton Hills Financial Planning director Gordon Bowden says: “This is something that seems to be against the spirit of the RDR. I do not see any difference between these kind of payments and commission.”

The FSA declined to comment.

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Readers' comments (20)

  • More unintended consequence's.
    Will it never end?
    The whole RDR experiment is a shambolic mess.

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  • For years now, large networks/ nationals have received payments from providers as part of "strategic relationships" - these can run into £m's pa.

    Providers have been told that they need to be part of the "partnership" if they want their local account managers to be given access to the business writers.

    This is grossly unfair & has always sat slightly awkwardly with providers, who in most cases, due to business levels from those large accounts, cannot be seen to withdraw the financial support.

    None of the larger providers have wanted to be the first to withdraw these "strategic partnership" arrangements. You will find that so called "Key Account Directors" discuss this with each other.

    Although - the payments can be substantial - in most cases that is just the start of the gravy train! The distributors then expect providers to pay for training, sponsorships, seminars/ conferences etc etc. Its about time the FSA did something to prevent this unfair advantage given to the larger groups.

    I would like to see how the balance sheets stack up when these payments are stopped!!

    At the end of the day, advisers will still need to place business!

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  • I used to work at a national IFA. In one year we recevied £1m in cash and benefits (such as hotel rooms etc) from large insurers.

    I know one of those ended up as a very preferred provider of a very popular service although some would not use them despite pressure from "above".

    I suppose it's always gone on, but it is becoming more obvious.

    It's only when the tide goes out that you see who isn't wearing trunks...

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  • A good indication of who will go bust post RDR ?

    "give me money to sell your products or let you speak to my advisers because we are skint!"..,

    " and obviously we would only ever put our client first!".....by the way, how good are your products anyway Mr Provider?, ...oh, it doesn't matter, just give us the cash for our Capital Adequacy anyway, before it gets banned under RDR under the "soft commission and inducements rules".... sod the clients!...

    NO COMMENT!......

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  • We are all in a sales world, to sell products and provide advice services firms (including networks) need to maximise income to support the continuation of services to clients as a sensible commercial decision. IF Providers want to survive post RDR and not see their business levels drop substantially they are going to have to step up and pay us for using their products.

    Is there anything in this damned industry that we don't do wrong?

    It seems to me that my belief that the RDR is designed to actually close down the IFA sector or at the very least render it an irrelevance in the broader distribution of financial products is beginning to look like the alleged "unintended consequences" of the RDR, were actually "intended"

    Call me paranoid if you wish, but it doesn't mean the FSA isn't out to close us down.

    An organisation that has as its fundamental principle that commercial businesses are not free to make commercial agreements with other commercial businesses for the benefit of the business/jobs/Clients etc is unfit to be called a regulator.

    Regulators should regulate, not impose restrictions on trade.

    There! Said it!

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  • @ Neill 10.43. Well said Neill. I dont know who all these people are who think we are here to do good work for clients but not be allowed to make a decent living in doing so. All the "windgers" should take up charity work or become social workers if they want to do things for free. By this time next year they could have a large number of IFA's ringing them looking for free advice. The RDR always was, is and always will be a disgrace to human decency in its current format!!!!!!!!

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  • Can somebody explain to me why any firm (apart from a network that seeks to place business with certain providers) would want to use a panel.

    If the panel is genuinely compiled based on sound principles it must necessarily be fluid. This could mean that it changes weekly.

    Given this it seems that the process of selcting a panel is essentially the analysis that all good advisers do for each individual client anyway.

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  • I am hearing rumours that an 'upmarket sales force' are telling people that they will still pay commissions on investments and pensions post RDR. anyone else hearing this to?

    Networks have always been after a deal whether it was increased commissions or just cash.

    The RDR experiment is not looking great at this time.

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  • idiots still dont get it, when will they learn, consumers deserve independent advice from the whole of market. Restricted panels, tied channels, direct sales, the bloody lot are just cash cows.

    Products will never become better value and fair if consumer choice is restricted.

    RDR and FSA ,,, bleep ,, bleeeeeeeep,, bleeeeeeeeep !

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  • OK Ned, I shall - you're paranoid!

    The advice world will continue along ok next year. RDR won't stop clients wanting advice, nor IFAs from providing (and charging) for it.

    Seriously Ned, you seem to have an RDR rant almost every day - it's not healthy! Get your business prepared over the next 9 months, and I think you'll find all will be ok next year after all.

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