The FSA has climbed down on its ban over IFAs being paid commission on stakeholder when life office representatives take IFA clients through decision trees.
The move is a victory for Aifa and IFAs whose lobbying contributed to the FSA's Regulatory Update 88 which confirms that IFAs will be paid for their advice even if life office staff are involved in so-called “tree-walking”.
The original commission ban, revealed in Money Mark-eting on March 1, followed the FSA's interpretation of PIA indirect-benefit rules. The regulator decided the rules were contravened by stakeholder commission in these circumstances.
IFAs were shocked and outraged by the FSA's position because it meant they could risk giving hours of advice to corporate clients but would have their commission blocked if the life office tree-walked individual scheme members.
RU 88 also confirms that IFAs can receive commission if the life office recruits scheme members by mailing individuals direct-offer mat-erial as long as the IFA has advised the employer on designating the scheme and the provider material does not promote the IFA.
FSA group manager (investment business policy) Norman Digance says: “We did not want to create a barrier and recognised if the rule was taken too literally it could prove detrimental.We have listened to the concerns of IFAs.”
Aifa director of public affairs Tracey Mullins says: “This is good news, it ensures good treatment for all IFAs. We are pleased that the FSA have listened.”
Roberts Clark Indepen-dent Financial Solutions director Jo Roberts, who wrote to the regulator when its original position was revealed, says:”I am delighted the FSA has made a U-turn. This will be better for consumers, better for advisers and providers and will contribute significantly to stakeholder take-up. It also means that advisers can get on and do what they do best without worrying about whether they will get paid or not.”