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FSA set to probe restricted advice panels

The FSA is set to probe the way distributors compile their restricted advice panels in the lead-up to the RDR, Money Marketing understands.

It is understood the FSA has been in regular contact with firms on the issue and may conduct a thematic review to ensure its guidelines are being followed.
Tenet distribution and development director Keith Richards says a number of networks are charging for a place on their restricted panels.

He says: “Tenet does not take money from providers although there are a few in the market that do. Tenet is unlikely to charge providers to be part of a panel but it is possible that commercial considerations will be discussed which may translate into lower charges for the client.”

Openwork proposition and marketing director Philip Martin says: “We do not charge providers to be on a panel. We will naturally wish to engage with providers that do sit on the panel to develop joint marketing initiatives but there is no charge to appear.”

Intrinsic and Origen say they do not charge providers to be on any panels. Honister Capital says it does not currently operate any restricted panels.

Sesame, Lighthouse, Paradigm and Positive Solutions declined to comment.

In November, Money Marketing revealed product providers were paying significant sums to distributors as part of long-term distribution deals arranged ahead of the RDR. An email seen by Money Marketing outlined details of a £2m payment from Aegon to Caerus for “sales and marketing activity to support our partnership”, although Aegon suggested this figure did not represent the final deal.

Quainton Hills Financial Planning director Gordon Bowden says: “This is something that seems to be against the spirit of the RDR. I do not see any difference between these kind of payments and commission.”

The FSA declined to comment.

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Comments

There are 20 comments at the moment, we would love to hear your opinion too.

  1. More unintended consequence’s.
    Will it never end?
    The whole RDR experiment is a shambolic mess.

  2. For years now, large networks/ nationals have received payments from providers as part of “strategic relationships” – these can run into £m’s pa.

    Providers have been told that they need to be part of the “partnership” if they want their local account managers to be given access to the business writers.

    This is grossly unfair & has always sat slightly awkwardly with providers, who in most cases, due to business levels from those large accounts, cannot be seen to withdraw the financial support.

    None of the larger providers have wanted to be the first to withdraw these “strategic partnership” arrangements. You will find that so called “Key Account Directors” discuss this with each other.

    Although – the payments can be substantial – in most cases that is just the start of the gravy train! The distributors then expect providers to pay for training, sponsorships, seminars/ conferences etc etc. Its about time the FSA did something to prevent this unfair advantage given to the larger groups.

    I would like to see how the balance sheets stack up when these payments are stopped!!

    At the end of the day, advisers will still need to place business!

  3. I used to work at a national IFA. In one year we recevied £1m in cash and benefits (such as hotel rooms etc) from large insurers.

    I know one of those ended up as a very preferred provider of a very popular service although some would not use them despite pressure from “above”.

    I suppose it’s always gone on, but it is becoming more obvious.

    It’s only when the tide goes out that you see who isn’t wearing trunks…

  4. A good indication of who will go bust post RDR ?

    “give me money to sell your products or let you speak to my advisers because we are skint!”..,

    ” and obviously we would only ever put our client first!”…..by the way, how good are your products anyway Mr Provider?, …oh, it doesn’t matter, just give us the cash for our Capital Adequacy anyway, before it gets banned under RDR under the “soft commission and inducements rules”…. sod the clients!…

    NO COMMENT!……

  5. We are all in a sales world, to sell products and provide advice services firms (including networks) need to maximise income to support the continuation of services to clients as a sensible commercial decision. IF Providers want to survive post RDR and not see their business levels drop substantially they are going to have to step up and pay us for using their products.

    Is there anything in this damned industry that we don’t do wrong?

    It seems to me that my belief that the RDR is designed to actually close down the IFA sector or at the very least render it an irrelevance in the broader distribution of financial products is beginning to look like the alleged “unintended consequences” of the RDR, were actually “intended”

    Call me paranoid if you wish, but it doesn’t mean the FSA isn’t out to close us down.

    An organisation that has as its fundamental principle that commercial businesses are not free to make commercial agreements with other commercial businesses for the benefit of the business/jobs/Clients etc is unfit to be called a regulator.

    Regulators should regulate, not impose restrictions on trade.

    There! Said it!

  6. @ Neill 10.43. Well said Neill. I dont know who all these people are who think we are here to do good work for clients but not be allowed to make a decent living in doing so. All the “windgers” should take up charity work or become social workers if they want to do things for free. By this time next year they could have a large number of IFA’s ringing them looking for free advice. The RDR always was, is and always will be a disgrace to human decency in its current format!!!!!!!!

  7. Can somebody explain to me why any firm (apart from a network that seeks to place business with certain providers) would want to use a panel.

    If the panel is genuinely compiled based on sound principles it must necessarily be fluid. This could mean that it changes weekly.

    Given this it seems that the process of selcting a panel is essentially the analysis that all good advisers do for each individual client anyway.

  8. I am hearing rumours that an ‘upmarket sales force’ are telling people that they will still pay commissions on investments and pensions post RDR. anyone else hearing this to?

    Networks have always been after a deal whether it was increased commissions or just cash.

    The RDR experiment is not looking great at this time.

  9. idiots still dont get it, when will they learn, consumers deserve independent advice from the whole of market. Restricted panels, tied channels, direct sales, the bloody lot are just cash cows.

    Products will never become better value and fair if consumer choice is restricted.

    RDR and FSA ,,, bleep ,, bleeeeeeeep,, bleeeeeeeeep !

  10. OK Ned, I shall – you’re paranoid!

    The advice world will continue along ok next year. RDR won’t stop clients wanting advice, nor IFAs from providing (and charging) for it.

    Seriously Ned, you seem to have an RDR rant almost every day – it’s not healthy! Get your business prepared over the next 9 months, and I think you’ll find all will be ok next year after all.

  11. “It is understood the FSA has been in regular contact with firms on the issue and may conduct a thematic review to ensure its guidelines are being followed.”There are two separate concepts here. One is a panel for protection products and the other a panel for investment products.
    Protection products are either rate driven, in which case the panel is the Web Site, or content driven, in which case the choice is unlikely to change often if the analysis it decent.
    If it is an investment product then the main object is the investment. And research indicates that a suitable outcome is a likely by throwing darts at a chart as by “scientific” research. There is research the indicates that inertia in investment matters can be more beneficial than activity. And as the FSA are so quick to remind us – the past is not a reliable guide to the future. So just who is to say an “inept, stagnant” panel is better that a “highly researched” panel.
    Commission is obviously verboten post RDR, so there can be no bias arising from that area!
    Based on these facts it rather looks as though there are parts of the FSA that are now under employed and not skilled enough to be entrusted with anything important like monitoring bank risk or derivatives exposure in “guaranteed” products. Or then again it maybe a tactic to ensure they have an excuse for looking in the wrong direction when the next crisis hits. Even having an inept panel is hardly likely to bring the country to its knees.
    I don’t believe that the FSA have any aim to close the adviser market. They are there to guarantee their own employment. This may have the unintended consequence of driving IFAs to the edge of sanity – but that’s not their intention, merely a satisfying outcome!

  12. I say what fools run the providers. Where a network estblishes a panel then fair be it that free market and commercialism apply. But we have just changed from one network to another neither of which have panels.

    Many providers now want to pay us a smaller amount because we are part of a smaller network. Those fools cannot work out that we as the IFA decide which provider we use not the network and thus their cosyness to networks will be their downfall.

    Come on National Account Managers – work out who influences distrubution!! And roll on RDR where what I am paid is an unfetted conversation between me and my client and the providers do as they are told when it comes to paying us.

  13. Yet another “Thematic Revue.” How about one to assess what good has been done by regulation since 1988?

    The whole country would now be better off had regulation never come in. A shame, because it was and may still be needed.

  14. A real whole of market panel, ran by professionals and monitored on a regular basis is a boon to advisers. Constructing and monitoring a panel is a full on job, on which advisers just don’t have the capacity to do properly.

    However, lots of networks and support cos run panels of products where its all down to making money out of the providers. So, I guess networks will be speedily reviewing their panels as we speak.

  15. Where there are no oxen, the feeding trough is clean, but the strength of an ox produces plentiful harvests. Proverbs 14:4

    When will the FSA realise that their quest for perfection is killing off the industry?

    Don’t hold your breath….

  16. These types of practise have been going on for years and go against the spirit of RDR (increasing transparency of costs for clients) and also do not feature the client’s best interests anywhere in the decision making process.

    I feel these types of practise should be banned by the FSA, or at the very least, hevaily disclosed so a client at least can see that the only reason an advice recommendation has been made is because of money having been paid.

    If a company cannot surivive without these types of cash injections from product providers perhaps they should not be in business.

  17. whats the problem with this? Presumably the providers will be offering the same products on the same terms to the larger nationals. If the providers decide to take a smaller profit margin and pass this in some way to the Network that allows distribution of a large volume of products then surely that makes commercial sense.

    Distribution of products (which is what providers do!) costs a lot of money. Surely it is down to each provider to decide how they do this. If the IFA Network / Firm then puts something on their panel that isn’t as good as a provider who is not paying them then they should be looked at.

    Where this whole thing gets really dodgy is where protection only networks actually increase premiums on protection products by “loading” the premium. Now that should be looked at!

  18. @ Dave- interesting thought process.
    But lets look at this again (if I may) – If providers stopped paying £000’s to networks, they could reduce AMC’s for ALL IFA’s/ clients!
    Also – thenetowrks/nationals do not tend to put products on panel from providers who do not become part of their strategic partniership process (pay money) – so those Advisers don’t et to use (possibly) the best product for the client.

    Also – surely ANY additional payment to Advisers (whether direct, indirect or via a Netowrl/ Parent) is Soft Commission & should be disclosed!!!

    Just some of my tjhoughts………..

  19. The FSA are just a bunch of incompetents. End of. Agree wholeheartedly with Ned Naylor. A bunch of old women gossiping round a water cooler about the best ways to shut down businesses that are easy targets, while completely missing the larger, more important scandals in the sector. They are the hammer that misses the nut.
    Those who can do, those who cant, get a job at Canary Towers. Theres an arab spring coming Hector…… the secrets out , and people arent afraid to say it anymore

  20. A real ‘whole of market’ panel run on an ethical basis by a good support co is a good thing. Trouble is, that most of the networks/nationals don’t do this. Either providers pay to be on the panel, or the network makes prospective providers pay for meetings to discuss products. The whole thing is completely biased, more so for the Life/CIC panels which are generally just based on commission uplift and skims for the network. No pay, no play!

    Any IFA using one of these WOM panels that are not WOM is potentially leading themselves open to the charge of non independence post RDR. An example of this would be one of the large networks which has a structured product section on their WOM panel. Now, as these products are generally tranche products, then without a team of people working flat out to review all the offers in the market on a day to day basis then the panel cannot of course be WOM.

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