The FSA is wrong to remove market average commission rates from its proposed disclosure documents, says Aegon.
Head of business regulation Steven Cameron says he agrees that the payment menu and initial disclosure documents are too lengthy and complex but market averages must be made available to consumers.
He says: “My concern is that if you spend the time analysing some of the information in the menu, it is quite helpful, in particular, the market average commission rates.
“Consumers do not buy financial services products very often and they definitely do not know what is a reasonable amount to be charged for the advice they receive. Having a market average is one way of benchmarking what is a reasonable charge.”
Cameron says if market averages are omitted from the new disclosure document, they should be made available to consumers elsewhere.
Informed Choice joint managing director Martin Bamford says doing away with market average commission could be a positive step. He says: “The market average commission rates used in the menu were distorted in some cases. They included commission from non-advised sales as well as advised sales, so it was difficult to use them with confidence.”
Compliance consultant Adam Samuel says the problem with the FSA’s proposal is that customers do not read or understand disclosure documents.
He says terms of business or client agreement documents which have clear and simple headings would be more easily understood by consumers.
Samuel says: “Research the FSA has commissioned does not justify lengthening the rulebook by the addition of further guidance. The regulator needs to accept that only an adviser can explain the nature of his or her services by reference to the agreement that he makes with his clients.”