The financial services industry should adopt the business model used in other retail sectors if it is to leave behind the problems with remuneration, says Helm Godfrey deputy chairman Roger SandersHe said at the Money Marketing round table meeting on commission last week that, unlike virtually any other retail sector, such as electronics, grocery or clothing, financial services fails to use the simple model of buying wholesale at a discounted rate and then marking up products to sell in a retail environment but with commission disclosed to the customer.
He told the round table panel of industry experts, including product providers, IFAs, big distribution networks and support service providers, that he felt the UK retail market was missing a trick. Sanders compared financial products with white goods that have greater transparency about commission when customers buy the products.
He said the FSA’s assertion that the current distribution model is not fit for purpose reflects how the Government, politicians, the regulator and Brussels are all trying to influence the debate.
Sanders said: “The model must be questioned if no one is making any money out of it. To find a solution for the future, we must look to where we have come from.
“The model of retail financial services is dysfunctional. We do not operate like any other retail market, where you are able to purchase products at a wholesale price, told what the cost of the commission is and distribute it in a retail space.”