View more on these topics

Advisers say multi-ties will spark a rise in commission

IFAs are predicting a rise in commission under a multi-tie regime as product providers look to secure their market share amid confusion over the willingness of the FSA to intervene.

The prediction comes as the FSA says that it will monitor multi-tied firms and product providers for breaches of the overriding commission rules but it refuses to stipulate at what stage they could be violated.

The rules prevent product providers paying “undue” levels of commission to advisers but IFAs say they cannot remember the FSA using these powers.

IFAs believe that product providers will take advantage of the FSA&#39s apparent reluctance to enforce these rules by using commission as a means of attracting distribution through multi-tied advisers.

The rules will become redundant for IFAs as they will have to switch to a preset fee or commission rebate charging structure.

Consultation paper 121 says: “Providers will still have to have regard to the &#39overall requirements&#39 the regulatory regime places on them and decide whe-ther actions to win market share on the basis of commission payable are consistent with the requirements.”

IFAs say that it is unclear what the phrase “overall requirements” means but they believe it is doubtful that the FSA will crack down on commission levels unless the dash for distribution really heats up.

FSA spokeswoman Louise Buckley says: “The over-riding commission rules are flexible enough for us to go in when we feel it is appropriate.”

Informed Choice managing director IFA Nick Bamford says: “One of the consequences is that we will see levels of commission increase.

“But I do not think that we will see them increase to the extent that the FSA steps in and beats people up.”

Recommended

Bless this spouse

The spouse-interest trust is perhaps the ultimate in flex-ible inheritance tax planning, addressing the key planning issue of access to capital or income if the client&#39s circumstances change. But does it work? The Inland Revenue thinks not but its first challenge has failed.Inheritance tax is said to be a voluntary tax. This is true to […]

Goodfellows – Mortgage Safety Net

Monday, January 21, 2002.Type: Accident, sickness and unemployment insurance.Maximum benefit: 65 per cent of monthly income or £1,500,whichever is lower.Benefit payment term: 12 months.Deferred period: None.Premium: £3.95 per £100.Commission: Initial 15 per cent.Tel: 01376 347369.

Commission cap would solve all the FSA&#39s concerns

I have now read the report off the FSA website and it appears to me that the one concern which came across from it was that some IFAs are influenced by commission amounts available from the product providers.That, to me, is all there is to it. So why they have spent so much time and […]

MFS plays aggressively in US rough and tumble

The MFS US growth equity fund is an Oeic that invests in US companies with good growth prospects. It is a clone of a fund run from Boston since 1996 by Irfan Ali and Peggy Adams. It will invest in around 107 stocks of all sizes. Sectors include financial services, technology, healthcare, leisure and business […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com