Last week, Money Marketing revealed that Clerical was to stop paying trail commission to the IFAs of several hundred clients after concluding the advisers were not offering a continued service.
Clerical wrote to 2,000 customers to check personal details and ask if they still used an IFA. If a client said they no longer actively dealt with an adviser, Clerical wrote to the IFA, telling them they would no longer receive trail commission.
But after pressure from advisers, Clerical has changed its stance and now says that no trail commission will be cancelled.
Clerical director of distribution John Van Der Wielen says: “Clerical Medical has not switched off any IFA commission and we apologise for any confusion caused.
“Our intention at all times has been to ensure that both we and IFAs hold the correct information for our mutual customers.
“We are working with the IFAs involved to ensure that their customer relationships and commission stream are protected.”
In an open letter to Van Der Wielen, SimplyBiz chairman Ken Davy had branded Clerical’s move as “reprehensible in the extreme”.
Davy said the move would encourage advisers towards up-front remuneration if they believe trail can be turned off in the future, just as the regulator and trade bodies are trying to move advisers towards more trail-based remuneration.
The letter said: “It is not up to the FSA or a product provider to determine what level of client servicing should be provided, or that in any particular circumstance remuneration should not be paid. I submit that it is totally inappropriate for a provider to solicit the reassignment of remuneration to themselves or anyone else.”
Aifa director general Chris Cummings had also attacked the move, saying: “If other providers follow suit, it will weaken the IFA profession and consequently less business will feed through and that would not be good news for anyone.”