View more on these topics

FSA backs trail with service

The FSA has hit back at calls by politicians to ban trail commission but say IFAs must prove they are giving ongoing advice.

It says its research shows that many consumers prefer a commission-based method of remuneration to payment by fees. However, it will tighten up its rules on trail to ensure that it is not being paid out regardless of service.

The regulator says consumers display a reluctance to pay for advice by way of a separate fee and they like the fact that no commission is paid if no product is bought.

Under its remit of treating customers fairly, the FSA will launch a probe into good and bad practice of commission and trail commission and the relationships between product providers and distributors.

But the FSA does acknowledge there are practical problems in asking IFAs to account for very small amounts of trail and it is proposing that firms will be able to agree with clients an acceptable amount of trail to be kept each year.

Earlier in the year, the Treasury select committee hit out at trail commission received by IFAs, claiming that many were getting money for investments made on behalf of clients when they were not doing any work year on year for the money.

The reaction from the FSA has disappointed consumer watchdog Which? which claims the regulator has ducked the issue.

The FSA says: “We would not consider a direct ban or limit on commission to be a proportionate response to the risk of commission bias.”

Which? principal policy adviser Mick McAteer says: “The FSA has further ducked out of making the market work by ruling out a direct ban on commission as it would not be proportionate. Instead, they are rely on disclosure to make the markets work which has been shown to fail in the past.”

Recommended

Mortgage sector is still reliant on paper processing

Most lenders still receive intermediary business in paper format, according to Marlborough Stirling&#39s mortgage benchmarking study. Of the 17 lenders in the study, 13 receive over 70 per cent of introduced business in paper format. Lenders have to re-enter information into their processing systems, leading to increased costs and a higher risk of errors. But […]

Boulger telling loan networks to go for quality

Charcol technical adviser Ray Boulger is warning networks that they should be selective about which brokers they choose and not take all-comers just to build up their numbers. Boulger says networks are desperate to get appointed representatives but he says mortgage intermediaries are still undecided as to what they want to do less than two […]

Destini&#39s child

Summer 2001Gary Keyes: We first began to think about an acquisition three years ago, when founding director John Collins retired as chairman of Adams Tingle. As the managing director, I realised that, in order to progress, Adams Tingle needed something more. Regulation around pension selling had created immense pressures on John and further FSA clampdowns […]

Mummy&#39s the word

Don Clark must take the prize for bravest trip across London this week thanks to his appearance at the Credit Suisse halloween party last week. The Black Country broker left his hotel – a full 20 minutes away from the Banqueting House venue – in nothing but a very long bandage, a few safety pins […]

Health - thumbnail

Fit for Work: guidance for employers published

On Friday, the Department for Work and Pensions published its guidance for employers on using the new Fit for Work (FfW) service to help ill employees return to the workplace. It also includes more details on the tax exemption for medical interventions that commenced on 1 January 2015.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    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

    Email: customerservices@moneymarketing.com