Towry Law chief executive Andrew Fisher this week reinforced comments first made to Money Marketing in May that the industry needs to be “cleaned up” by removing commission payments to advisers.
He has urged the FSA to force financial advisers into radical change, accusing much of the £3.2bn paid out in initial commissions of being “bribery” from providers to attract new business.
Facts & Figures Financial Planners managing director Simon Webster says Fisher’s comments are reminiscent of the pot calling the kettle black.
He says: “Towry Law only moved to their new fee-only model a few short months ago after many years operating on a commission basis. So Fisher’s statement is a transparent and self-serving attempt to bolster their new business model.”
Webster insists 90 per cent of his clients choose to pay commission when given the choice and instead of banning it altogether, the FSA should set a maximum for commissions.
“The only area at issue is that bonds pay up to 8 per cent while unit and investment trusts pay 3 per cent and 0.5 per cent. This is the only area where I can see a real risk of commission bias and as many elsewhere have said, why does the FSA just not prescribe a maximum commission level that is allowed.”
Douglas Baillie Limited director Douglas Baillie says banning commission will drive up prices for consumers.
He says: “Any fee charging proposal will increase the costs to the average consumer because VAT will have to be added to the fee and in virtually all cases will be irrecoverable by the customer.”
Alastair Clarke & Co principal Alastair Clarke says Fisher should come down from his “ivory tower”.
He says: “I read with some perplexity Andrew Fisher’s rant about the whole industry ‘fleecing’ clients by being paid commission. I suppose in a perfect world every client would be willing to pay an hourly rate for all their advice, but most can’t afford to or don’t want to.
“In our network every mortgage deal can be checked remotely and naturally we expect to use the most appropriate lender or protection insurer. Besides, most pay similar amounts of commission if it comes down to that.”
MKM Financial Management principal Martin McArthur says: “Could it be a case of a firm implementing a rigid payment structure, seeing that organisations who can offer their clients more payment options are a threat and so jump on a flawed band wagon to try and get some business for themselves.”