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Cazalet slams NU over 20% commission deal

Cazalet Consulting principal Ned Cazalet has attacked Norwich Union’s decision to offer up-front indemnity commission on its retail funds, saying IFAs accepting this payment will struggle to continue calling themselves independent.

His criticism follows NU’s move to offer advisers 20 per cent of the first year’s contributions as up-front commission on regular savings business. He says NU has in the past admitted it increased commission on pension products to gain market share and believes the introduction of indemnity commission on its 35 retail funds could tempt IFAs to promote funds that may be unsuitable for clients.

Cazalet says: “How does the IFA business continue to have the ‘I’ in it if this commission structure works? How can you have an independent adviser if NU is jacking the commission structure because it helps market share? There is an absolute correlation between amount of commission and level of sales. If there was not, commission levels would drop.”

NU sales director John Clougherty says the move is designed to encourage people who cannot afford advice to save as well as increase market share.

He says: “To assume the entire IFA market would be swayed by one group is not viable and is grossly unfair.”

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