View more on these topics

Commission conundrum

Is commission drinking in the last chance saloon? That is the view of Aifa&#39s director general Paul Smee. He has warned advisers that a failure to embrace the new payment menu could see politicians putting pressure on the FSA for a clampdown.

It is clear that the Treasury select committee has wreaked a lot of reputational damage on the advice industry and this is long before any published report on restoring confidence in long-term savings.

On what might be called another front, the LIA has just put in a paper in response to CP121 reopening the arguments on the menu by calling for a fee equivalence system.

Investment IFA BestInvest suggests that all IFAs need to wean themselves off up-front commission and move to trail and fees to end misselling and the suspicion of it.

But Aifa does not appear to have much appetite for renewed debate.

It also attributes a great deal of clout to the Treasury select committee. The committee is an influencer – it cannot order the FSA to do anything – but perhaps as its comments get harsher that influence grows. There are no doubt concerns among politicians as yet unexpressed that the menu is already too much of a compromise.

However, those who would attack commission outright need to consider what replaces it. Restricting commission say by tightening the definition of independence will simply pump-prime multi-ties which will surely increase, not decrease,reliance on commission.

The scenario that Aifa has mapped out is a Hobson&#39s Choice. IFAs have grown used to those but it would be horrible if the result of the menu&#39s failure was a return to the meltdown of independents that was the defined-payment system.


PJB property is golden goose

PINDER FRY & BENJAMIN Gold 9 Type: Exempt unit trust Aim: Growth by investing in a central London office rented by international accountancy firm Ernst & Young Minimum investment: Lump sum £25,000 Investment split: 100% in a commercial property Place of registration: Dublin Closing date: July 14, 2004 Charges: Initial 4.96% Commission: Initial 1.75% Tel: […]

IFP bids to win better PI deal for members

The Institute of Financial Planning is trying to get a better deal for its members on professional indemnity insurance. Chief executive Nick Cann believes his members, who are all certified financial planners, are lower-risk than other IFA businesses as they have good audit trails, are mainly fee-based, which is broadly perceived as being a more […]

Only 27,000 Irish stakeholder sales in first year

Only 27,000 of Ireland&#39s stakeholder-style pensions have been sold in the product&#39s first year even though it allows a 5 per cent bid/offer spread plus a 1 per cent annual charge. Irish consumers are spurning the state-sponsored Personal Retirement Savings Account even though its charging structure is what many life offices see as the solution […]

Smee warning that payment menu is the last chance for commission

Aifa director general Paul Smee is warning the industry that failure to embrace the spirit of the menu could see commission-based advice slipping away. Smee says if the industry does not use the opportunity of the menu to make commission more transparent then he believes the regulator will come back with more ideas beyond the […]


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