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Adviser charging should be spelt out in rules

The retail distribution review’s remuneration requirements cannot be implemented successfully under principle-based regulation and must be set down explicitly in FSA rules, says Royal London head of corporate affairs Gareth Evans.

Speaking at a Money Marketing round table last week, Evans said remuneration free from product provider influence is a positive step but its implementation will be a challenge.

He said protection could be a particular problem if the FSA eventually extends the proposed remuneration requirements to this sector.

He said: “It will be extremely difficult to introduce adviser-set remuneration in a risk-based market such as protection. It is clear from my conversations with the regulator that it is concerned about the mortgage and protection market.”

Money Portal head of distribution strategy Alan Easter said advisers will have to wait for the publication of the FSA’s next mortgage and protection papers for clarity on any future changes.

He said: “The regulator is planning on publishing these two papers but the issue is with timing. Until the papers come out, advisers will not know which regime they are meant to be working under. It is a no man’s land.”

JP Morgan Asset Management head of UK sales Jasper Berens said it is imperative that advisers have control over what they charge for their services. He said: ” The FSA should not determine what advisers charge, that is not for the regulator to do.”

Tenet group distribution and development director Keith Richards said: “If the move to adviser-set remuneration leads to better consumer understanding of the value and cost of advice, separate from the product, it will be a good outcome.”

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