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&#39Consumers do not know they pay IFA commission&#39

Many consumers do not understand they pay for their advisers&#39 commission through charges, believing providers pay the costs of remuneration, according to Ron Sandler.

Responding to IFA questions in this week&#39s Money Marketing, the man heading the ongoing review into medium-term and long-term savings, which covers the impact of commission bias, says the complexities of commission structures makes it difficult to determine what is being paid.

Responding to a question by Simpsons partner Andrew Merricks on why commission disclosure has failed to bring down commission levels and push consumers towards fees, Sandler says: “It seems that at least part of the explanation lies in the fact that many consumers do not seem to understand that in the end they pay for commission and believe that these costs are borne by the provider.

“It is clear that disclosure per se is of limited value unless it is accompanied by real consumer choice and we are still investigating to what extent consumers appreciate their choices post-commission disclosure.”

Sandler&#39s responses represent the first time since the consultation paper was released in July that he has communicated directly and publicly to IFAs.

Sandler review, p14-16

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