View more on these topics

Aifa issues first RDR paper to advisers defining CAR

Aifa has issued its first paper on the retail distribution review, entitled RDR Issues Paper 1: Commission and Customer Agreed Remuneration.

The paper sets out the facts surrounding the FSA’s remuneration proposals for advisers, including the possible introduction of CAR and a potential ban on commission for professional financial planners.

Deputy director general Fay Goddard says: “The RDR introduces CAR as an alternative to commission, aimed at removing the perceived stigma of commission and the current disinclination of consumers to paying fees.

“There has been some confusion and misunderstanding over what CAR actually is, or could be. We will be consulting members shortly to assess the appetite for CAR and whether or how it sits alongside commission.”

Aifa says the key points to consider are that the FSA is not proposing to ban commission, that the proposal is to disallow commission in the PFP category only and that commission on lump sum payments can be called CAR if agreed with the client up front.

It also highlights that indemnity commission on regular investments can be treated as CAR provided the amount of “commission” is agreed up front, while fee-based firms using commission offset can adapt to CAR.

Aifa says in practice CAR means there will not be any need to deal with any under or over payment of commission, such as rebating, product enhancement or requesting any balance of an agreed fee.

Goddard says: “Most important of all is whether clients will understand and engage with the concept or simply be put off taking advice. Realistically, we do not expect clients to engage in bilateral negotiations to agree a fee. As with any other profession, the scale or rate of fees should be set by the firm, discussed and clearly disclosed at the outset.”


Moffatt quits Portal

The Money Portal head of investment development David Moffatt is leaving the group this week and is returning to former employer Adnitor.Moffatt joined TMP 18 months ago to set up its platform strategy and help launch its fund range but plans for both have been put on ice.Moffatt leaves TMP this week, officially finishing on […]

Insurer called on to flesh out details of veggie-only cover

Bupa has questioned how Animal Friends Insurance intends to police its offer of discounted life insurance for vegetarians and ensure carnivores do not take out cover.The not-for-profit insurer, which specialises in pet insurance, is offering 6 per cent discount on life premiums to vegetarians and fish-eaters.It claims vegetarians are less likely to suffer from a […]

Variable mortgages uptake sees 50 per cent increase says Spicerhaart

The percentage of borrowers opting for variable mortgages has increased by 50 per cent in July, according to the Spicerhaart Financial Services monthly mortgage survey.Despite the base rate rising for the fifth time in a year to 5.75 per cent in July, the percentage of borrowers opting for variable mortgages increased by 50 per cent, […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    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