He says the network continues to pay its advisers trail commission after they retire but the issue of renewal commission is becoming increasingly complicated due to contradictory business terms in the documents drawn up by providers and IFAs.
He says: “A lot of the terms of business that I have to sign from product providers say ‘IFA members that are not servicing will not be paid’. But our members’ terms of business to the client say ‘We do not have to do anything to continue receiving renewal’. There is a legal clash that needs to be sorted out.”
McIver believes the root of the problem lies with the perception of why trail commission is paid and says legalities must be separated from subjectivity.
He says: “It has got nothing to do with servicing. Trail is always the IFA’s money, it is just payment from the initial commission that has been held back.”
McIver believes TCF continues to be a nebulous issue for many but it could hold the key to the legal problems. “TCF could be used to overrule both parties when somebody does not really know the answer,” he says.
He describes Clerical Medical’s recent U-turn on halting trail to some advisers as “a near miss” but says other firms may believe they have the legal ability to do the same thing.
He says: “Clerical has exposed that providers are paying renewal to an IFA when it is quite clear that the client is not being serviced. Morally, the argument for trail is not clear cut but it my eyes it is black and white that advisers should receive trail.”