View more on these topics

FCA allows pre-RDR DFM ‘kickbacks’ but bans new payments for top-ups

FCA logo original size

The Financial Conduct Authority has decided to allow “kickback” referral payments to advisers from discretionary fund managers on pre-RDR business, but banned new payments related to DFM top-ups.

The regulator published a consultation paper last week which proposes to ban post-RDR DFM referral payments to advisers where the adviser has recommended the client should pay more into the DFM-held investments. The rules will come into effect on 31 December 2014 if agreed.

Under the RDR, the FSA banned DFM payments to advisers where clients are referred to a DFM and provided with a personal product recommendation.

In February, the FSA sent trade bodies a briefing note setting out four options for legacy DFM referrals: switch off all referral payments following a transitional period; allow payments for pre-RDR referrals but ban them for post-RDR top-ups; allow referral payments to continue on original investments but turn them off following fund switches, echoing the position on trail commission; and allow payments for pre-RDR referrals but reduce the level of payments for post-RDR top-ups.

The FCA has proposed going ahead with the second option. It had initially wanted payments to stop following fund switches, but now says banning DFM payments on post-RDR top-ups is less complex.

The regulator also plans to extend the payments ban to advisers who continue to provide other services to clients referred to DFMs, such as providing the client with market research or passing information from the DFM to the client.

Jacksons Wealth Management managing director Pete Matthew says: “The FCA has made the right decision, as it should follow that DFM payments comply with RDR rules. One would hope that payments in relation to pre-RDR are being disclosed, so I think the regulator has struck the right balance.”



FCA to set out views on SVR hikes

The Financial Conduct Authority is to set out its position on hikes to standard variable rates as part of a wider industry discussion around fairness in mortgage contracts. Minutes from the FCA board meeting in June, published yesterday, reveal the board discussed options to clarify the regulator’s views on SVR changes. The regulator has decided […]

FCA admits concerns over BoI rate hike

The Financial Conduct Authority has revealed concern about the Bank of Ireland’s mortgage rate hike and is working with the lender to help consumers. In a letter to Treasury select committee chair Andrew Tyrie, dated 20 May but only published this week, FCA chief executive Martin Wheatley says its powers are restricted because all mortgages […]


Who are the winners and losers in state pension shake-up?

The Institute for Fiscal Studies has published an in-depth analysis setting out the winners and losers from Government reforms to the state pension. Earlier this year, pensions minister Steve Webb confirmed the Government would press ahead with proposals to introduce a flat rate, single tier state pension for future retirees in April 2016. The new […]


Govt rejects Care bill push for regulated advice referrals

The Government has rejected amendments to the Care bill to force councils to refer long-term care funders to regulated financial advisers. The Care bill provides for councils to signpost funders of long-term care to “independent financial advice”, which could mean charities such as Citizens Advice Bureau but not necessarily regulated advisers. International Longevity Centre chief […]


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