The FSA is forcing life offices to block IFA commission on stakeholder if their call centre staff take clients through decision trees, potentially leaving IFAs unpaid for hours of work.
The move means even if a commission-based IFA has advised an employer, performed a worksite presentation, distributed marketing material and convinced dozens to take the next step of applying for a stakeholder, they cannot be paid by life offices if representatives of the provider go through tree-walking scripts with individuals.
Life offices which do pay commission in these circumstances will be accused of executing non-compliant sales by the FSA.
The regulator has outraged IFAs. The move is being described by industry experts as an extraordinary restriction on the relationship between IFAs and life offices.
FSA spokeswoman Jackie Blyth says: “If IFAs were to be paid, this would breach indirect-benefit rules as the IFA will have probably been paid a fee by the employer. If members do go directly to life offices, then the company is doing the work of IFAs.”
Bruce & Partners partner Adam Bell says: “I think this is crazy. The whole point of decision trees is that they are not advice, so non-regulated individuals are not doing IFAs' jobs.”
Scottish Equitable pensions development manager Stewart Ritchie says: “I am not clear on the FSA's rationale behind this extraordinary restriction. You wonder whether a high enough view has been taken on this as it flies in the face of the Government's objective.”
My Money Adviser managing director Ann-Marie Martyn says: “If the IFA owns the clients then they should be remunerated. If the FSA is hell-bent on introducing this, then IFAs have to find a way of helping clients through the decision tree maze cost-effectively avoiding product providers.”