FSA director of conduct policy Sheila Nicoll, writing in next week’s Money Marketing, says: “In requiring firms to abandon commission from 2013, we are not challenging your right to continue to receive trail commission for advice given in the past.
“If, at the end of 2012, an adviser firm has a right to receive trail commission, we will not be seeking to interfere with that. And if, for example, an advisory business is sold, our new rules will not prevent entitlements to trail commission from being transferred to the new firm.”
Nicoll says this applies to firms that change their authorisation from directly authorised to an appointed representative of a network, and vice versa.
She adds: “Of course, after 2012, it will not be possible to generate new trail commission entitlements and, over time, trail commission will peter out altogether in the investment market.”
The FSA previously said in its March policy statement that where a client moves to a new adviser, the client should receive the trail commission previously paid to the old adviser, leading Aifa to voice concerns about what would happen if clients are novated.
Aifa director general Chris Cummings says: “The recently announced trail commission rules threatened to undermine the financial stability of adviser firms. While trying to protect consumers, the FSA was in danger of fundamentally damaging firms, which in turn would adversely affect the customer.
“We are grateful that the regulator is listening to our concerns and those of the adviser community. We welcome clarification on this issue from the FSA.”
For Nicoll’s full article see next week’s issue of Money Marketing.