The FSA has sent a Dear CEO letter to 24 providers and advisers warning against payments which “work around” the commission ban under the RDR and adds it is likely to take enforcement action.
The regulator says its supervisory work has alerted it to “moves in the market which could undermine” adviser charging and unfairly disadvantage advisers who are working hard to prepare for adviser charging.
Last November, Money Marketing revealed product providers are paying significant sums of money to distributors as part of long-term distribution deals arranged ahead of the RDR.
Speaking to Money Marketing, FSA head of department, life insurance Nick Poyntz-Wright says: “I think action will probably be necessary and that is why we have developed a heightened concern and why we have taken these steps to gather information.”
Poyntz-Wright adds a number of recent deals, particularly involving large adviser firms, have attracted the regulator’s attention. He declined to name specific firms.
Lighthouse chief executive Malcolm Streatfield says the firm does not have any concerns about the letter. He says: “We do not have any arrangements which run past the end of the year.”
Threesixty Services managing director Phil Young says: “I would be supportive of the FSA banning all payments between providers and distribution firms in order to stamp out any problems or at least give some very specific rules about what you can and cannot do.”
An Aegon spokesman says: “Any decision to make payments to distributors is subject to our own stringent checks around compliance with the FSA rules.”
Partnership managing director of retirement Andrew Megson says: “We have taken legal advice and I am confident that we comply with the FSA rules both currently and post-RDR.”
Tenet distribution and development director Keith Richards says: “Tenet is confident the arrangements in place are compliant with RDR requirements.”