View more on these topics

Graham Bentley: Why rivals should follow Threesixty’s disclosure lead


Once upon a time (well, in the 1970s), before we were right royally regulated, unit-linked insurance companies were party to widespread depleting of skip-loads of investors’ monthly premiums via high margins, in turn funding coercively acquired commissions for often ignoble introducers.

Many of these ‘businesses’ were actually roving “unaffiliated” sales teams – guns for hire – who could be persuaded to channel their team’s business to a particular provider in exchange for volume related payments to the businesses’ management. There was no distinction regarding independence.

Of course, these scattered salesmen had little real distribution power. But it became clear that if these chaps (for chaps they were, almost exclusively) could be gathered into one team, then the collective bargaining power might tip the balance to the distributor. The appearance of Networks in the late 1970s and early 1980s reflected this; regulation merely speeded up that process, as those networks purported to take on the responsibilities of running a salesman’s business and compliance responsibilities in exchange for a cut of the commission.

The new distributor was now a large group of salesmen being directed by a “service company” who would amongst other things create a recommended products list, implying due diligence had been performed. Providers have regularly provided Nationals and Networks with “training and marketing” support.

However, don’t imagine providers as Soviet style paymasters funding the equivalent of a rogue state. I know of many occasions where providers have been threatened by such organisations who made it very clear that the provider’s products would not be even considered for panelling unless their palms were greased.

We’re not talking about sandwich money here – millions of pounds have exchanged oily hands to the extent that their business models were unsustainable without the payments.

You may be used to the idea of guest speakers being paid by event organisers…well the rule in this industry has often been that the provider pays the distributor tens of thousands of pounds simply to speak for 20 minutes at a conference.

Thankfully the FCA aims to put a stop to this. I have no argument with the idea that altruistic providers who care deeply about their customers and the health of the intermediated market, should want to sponsor service organisations’ efforts in that direction. And frankly I couldn’t care less if supportive providers were simply cynical marketing juggernauts hoping to score minor and temporary points over competitors by sponsoring a soon to be forgotten CPDable seminar on junior Isas.

I do not, however, believe that any recipient organisation should profit by way of those payments. I don’t believe that deep-pocketed providers should gain some marketing exposure and potential advantage simply because they stumped up more cash than their rivals.

There should be no suggestion that any support service firm is likely to be in a provider’s pocket. I think Phil Young’s stand on this, and his challenge to other businesses who receive these payments to make those revenues transparent, is entirely laudable. I am reminded of the pre-RDR clamour for platforms to reveal their rebates, in the name of transparency. So far no one has followed Threesixty’s lead. I trust they’re just checking the numbers…

Graham Bentley is managing director at gbi2



Skandia will pay trail commission until 2016

Skandia says it will continue to pay trail commission on past business through its platform until the FCA implements its ban on legacy payments between fund managers and platforms in April 2016.    The firm says it opposes moves by other platforms to end trail commission on legacy business before the April 2016 deadline set by […]


Aviva: OFT report could ‘kill off’ pension master trusts

Aviva says the Office of Fair Trading’s report into the UK defined contribution pensions market could “kill off” commercial master trusts. The OFT yesterday published a study into the DC market which sets out serious concerns about a lack of competition, legacy charges and poor governance standards. The report also warns trustees of multi-employer master trust […]

People on the move

John Beale has left the role of training and competence director at IFA network Pi Financial. He joins Brewin Dolphin in December as regional training & competency manager. Former Towry director Gauis Jones has joined Ashcourt Rowan. Jones, who spent 14 years with Towry, has replaced Chris Williams as chief executive of Ashcourt Rowan’s financial planning business. Lift […]


News and expert analysis straight to your inbox

Sign up


There are 2 comments at the moment, we would love to hear your opinion too.

  1. Which has greater influence over behaviour: (a) the parent company of a wholly owned subsidiary, (b) a network over one of its ARs or (c) a support service provider over a directly authorised firm.

    Why anyone would pay money to (c) is beyond me. In fact the FCA position here can only help mask the stupidity of sales and marketing directors of product providers the land over who have criminally spent millions on this. Provider FDs (or anyone who can do a basic cost/benefit analysis) will be breathing a heavy sigh of relief that at least they are going to have to get something tangible for their money going forward.

    That said on the above article, and the orginal one to which it refers, I cannot help but think it must have been a quiet in-box day for Mr Young who, in a mischievous frame of mind, overlooked the fact that by disclosing what, I guess in his eyes, is a small amount he could be accused of hypocrisy. Being a wholly-owned subsidiary cedes total control to the parent and also provides, through inter-company accounting, a perfect mechanism for subsidising proposition costs and ongoing financial support.

    Although if I was a client of a wholly-owned subsidiary of a financial services group that still relied (heavily) on provider marketing revenues then I would probably be asking myself questions on the long-term future of that business.

  2. When the Markets collapsed and everyone blamed Lenders for the appalling debt we were in, very few would openly criticise the public for reckless borrowing – yet they were equally to blame.

    The Point made regarding Provider FD’s is valid for the same reason as there were two protagonists to create this problem and both were willing to receive the benefits of their involvement. When the Dear CEO letter was issued last year, it is true that providers quietly breathed a sigh of relief that the ridiculous sums being charged would become a thing of the past – but shouldn’t they both take the blame?

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm