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Ban on commission would widen savings gap

Abolition of initial commission would force 28 per cent of IFAs out of business and widen the savings gap by £4bn, according to the ABI-commissioned Oliver, Wyman & Co report.

Many of the rest would be driven to become multi-ties to survive while a wholesale ban of initial and fund-based commission would drive half of IFAs out of the market.

The full report seen by Money Marketing makes a number of key policy suggestions, such as compelling employers to pay for advice to generate £11bn a year. A ban on initial commission in favour of fund-related remuneration would hit the annual savings total by £2bn. Banning commission entirely would reduce savings by £4bn, it predicts.

The report concludes: “Depolarisation may be seen then as involving potentially major – and largely unforeseeable – change in industry structure in return for little consumer benefit.”

ABI head of media and political affairs Alan Leaman says: “The report has been sent to the FSA, Treasury, Department for Work and Pensions. We really hope the policy implications of the research will be chewed over and discussed.”

Wentworth Rose managing director Philip Rose says: “The savings gap figures will not come as a surprise for anyone who has been advising. People want two things – quality products and reassurance. Without the mixture of fees and commission available, there is a real danger the lower end of the market will fall prey to direct salesforces or not save at all.”

Comment, p27


Actuaries call for carry-forward to stay

Actuaries are calling on the Government to reverse the withdrawal of carry-forward as part of proposals designed to improve the returns from personal pensions for low-income savers. The suggestion is contained in a paper presented to the Institute of Actuaries this week which aims to show how a reinstated carry-forward period of 25 years would […]

Close Property invests in Fareham

Close Property Investment Fareham Innovation Fund Type: Unit trust. Aim: Income by investing in a commercial property. Minimum investment: Lump sum £10,000. Investment split: 100 per cent Fareham Innovation Centre. Yield: 11 per cent. Isa link: No. Pep transfers: No. Charges: Initial 7.25 per cent, annual 1.25 per cent. Commission: Initial 3 per cent. Tel: […]

NU adds its strength to help lift the cap

Norwich Union is hoping to use its financial muscle and market share to lobby the Government to review the 1 per cent cap on stakeholder.NU took £42m of individual stakeholder business on an equivalent premium income basis for the nine months to September 30, out of £168m overall individual business. Group stakeholder sales totalled £21m […]

Lumsden to take over at Standard

Standard Life chief executive designate Iain Lumsden will take the reins of the mutual from December 15 following the retirement of current chief executive Jim Stretton.Group managing director and mutuality stalwart Scott Bell will not step down until March 2002 after more than 40 years at the life office, after which Lumsden will take over […]


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