Advisers and insurers are relieved at the FSA’s decision to allow commission to remain for protection products.
In the retail distribution review consultation paper, the FSA says it will not introduce adviser-charging for protection but will require firms to disclose a commission payment where pure protection is sold at the same time as investment advice.
Axxis Financial Planning dir-ector Owen Wintersgill says: “It is good to know that the regulator and all parties concerned are finally realising that some financial services products such as protection are absolutely sold, not bought. Removing commission would be completely counter-productive and nobody would pay a fee for advice on protection.”
P3 Wealth Management managing director Frank O’Donnell says: “If they had to pay a fee for protection advice, the chances are that the consumer would not take a policy out so for that reason, it makes a lot of sense.”
However, Calculis director Alex Pegley says banning commission should apply to protection. He says: “If we are going to do this, then let’s all go down the adviser-charging route. It is a further watering down and the regulator has obviously been lobbied by some groups. They should just scrap commission.”