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Commission should be a choice

The recent story providing financial journalists with plenty of ammunition against financial advisers is that of £14,000 commission being paid on a £200,000 bond. It must bring revulsion to the many independent financial advisers who work hard for their clients and have modest incomes.

Journalists and IFAs should unite in demanding that all cases of commission of over, say, £10,000, are reported to some organisation for checking. We are all on the line when such instances occur and it is not in any adviser’s interest to resist a check on large commission in some way if they want to be part of an industry that can hold its head up and be trusted.

While such instances give rise to demands to abolish commission, what is more important is that clients are treated fairly. This means that commission is essential at times.

Defining commission as payment by a provider, can any of the whiter than white, fee-only advisers put on their sunshades to stop the glare from their halos and explain to me why a client reaching 75, with more than sufficient income, has to pay me a fee from his own free money when the same amount could be paid by the provider from pension funds, which may never be exhausted in his lifetime?

Similarly, why should a higher-rate taxpaying client not be advised to make a lump sum payment into his pension plan which will provide sufficient funds to allow for the payment of fees through commission from the provider, so getting tax relief on the fees?

Why should a divorcee, with virtually no capital, not be allowed to make payment, albeit at an enormously reduced rate, from the pension funds being transferred to her?

A truly independent adviser works solely for the client and should have choice about remuneration so that the client gets the maximum benefit.

Rosemary Heaversedge

Chartered Financial Planner

Shropshire Independent Finacial Services

Shrewsbury

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