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Advisers will be probed on rebated commission

IFAs will be questioned over the amount of commission they rebate back to clients as part of the FSA&#39s bid to calculate the market average commission under its menu proposals.

The FSA is proposing to carry out regular surveys of advisers to derive the effect of direct rebating on the commission figures so it can more accurately calculate what the market average should be.

This information will be collated with data from product providers on how much commission they pay in different product areas.

The FSA says providers may not necessarily know if advisers are rebating commission directly to customers but says it is not that important for the market average commission to be completely accurate as its own research suggests that consumers do not expect it to offer anything more than an indication of what the true average will be.

IFA network Alpha to Omega chief executive Stewart Wooles says it will be hard to come up with an IFA sample that will not be statistically skewed.

He says: “These samples tend to run with volume, not value, meaning those with significantly better rates will be under-represented.”

LIA head of public affairs John Ellis says: “Because the market average will need to be changed all the time, I can see a lot of old copies of the menu floating around. It will be out of date before it hits the streets.”

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