In the feedback statement released on Tuesday, the FSA hit out at providers which it says are increasing commission rates, particularly on insurance bond business, to stimulate sales in difficult market conditions.
The regulator says there is evidence that providers may be using the RDR as an excuse to boost commission by saying they are offering remuneration flexibility to advisers. But it warns this may lead to “further commission increases and the possibility of unsuitable sales”.
It says it will be watching out for providers offering “closing-down” commission deals and advisers churning policies before initial commission is withdrawn.
It also warns providers against trying to get around the clampdown on remuneration practices by creating alternative financial arrangements with adviser firms.
Anand Associates financial architect James Brook says: “Bancassurers will no doubt be trying to squeeze the last ounce of commission out of people before the deadline. It would be a dreadful shame and a damning indictment of those providers and advisers if they do what the FSA fears they are going to and they should be ashamed.”