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ABI lobbies FSA on delay to legacy commission ban

The Association of British Insurers has written to FSA chief executive Hector Sants to push for a delay in introducing the ban on legacy commission.

Money Marketing reported last month that the ABI, Aifa, and the Investment Management Association are understood to be working on a combined response to the legacy commission issue as part of the FSA’s guidance consultation on legacy commission to be published later this month.

The FSA wrote to trade bodies in March to clarify that legacy commission will be banned under the RDR, 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 ABI has now written to FSA chief executive Hector Sants over the issue.

The trade body says its supports the original timetable for the RDR of January 1, 2013, but wants an unspecified ‘period of transition’ for legacy business.

ABI director of life and savings Maggie Craig (pictured) says: “If we get this wrong we will not be given another chance to get it right. That is why it is so important that we do not forget existing customers and their financial arrangements.

“We cannot change the rules at a moment’s notice without customers suffering disadvantage so we are asking the FSA that, in light of this shift in position, we have more time to make sure our customers are moved onto new arrangements in the proper way.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. All FSA timetables will be ignored from now on, with staff leaving and workloads increasing their main target of complicating all processes in the industry will continue unabated until they are re-invented at a later date. Can anyone in authority tell me how many applications to cancel permissions have been received in the last year? My understanding is it is in the tens of thousands!

  2. Surely the quote shoud be:-

    That is why it is so important that we do not forget existing customers and their financial arrangements…..and continue to be allowed to take vast sums from their plans to which they either are are not aware of or haven’t agreed to…

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