The FSA has sent out a warning to product providers and intermediaries over up-front payments for panel membership.
It says it has been told that some intermediaries are demanding up-front payments – in some cases, over £1m – as a condition for a provider's products being placed on or even considered for their panel or recommended list.
A letter to the chief executives of banks, building societies, life companies and networks sent out by the FSA last week warns firms that any such payments would be frowned upon by the regulator as they would not be consistent with its rules.
Money Marketing revealed in June how some of the bigger providers such as Legal & General and Standard Life are believed to be offering to pay IFAs' professional indemnity insurance to be on multi-tie panels.
Some of the bigger protection players are also believed to be negotiating panel positions through enhanced protection commission offers, as this will not have to be disclosed on the menu.
The evidence is described by the FSA as anecdotal. FSA spokesman Rob McIvor says: “We heard that this was going on from a number of different sources and needed to give a quick warning so we issued the letter. We do not know if this sort of abuse is or is not happening – this is a pre-emptive strike.”
Informed Choice managing director Nick Bamford says:”It would be naive on the part of the regulator and on the part of IFAs if we did not believe that product providers were already in negotiations. I would be more surprised if they were not.”