Trade bodies unite to tackle legacy commission issue
Adviser and provider trade bodies are working together to address the FSA’s concerns over legacy commission.
Money Marketing understands Aifa, the Association of British Insurers and the Investment Management Association are working on a combined solution to be put to the FSA as part of its legacy commission consultation. The regulator sent a letter to trade bodies in March to clarify that legacy commission will be banned under the retail distribution review, although trail commission brokered before 2013 can continue.
The FSA defines legacy commission as additional commission payable under a contract signed before December 31, 2012 but as a result of an event that takes place after that date but there is still a lack of clarity over the definition.
The industry has called on the FSA to provide clarity on the treatment of legacy business after the RDR and specific rules about what the regulator deems to be new business.
Aifa policy director Andrew Strange says: “Legacy remains one of the parts of the RDR implementation that causes us concern. Like many policy issues, we are working across the industry to come up with a solution that works for all parties.”