Hargreaves Lansdown chief executive Peter Hargreaves has waded into the debate on commission, accusing life companies of creating the problem by playing “commission leapfrog” to drive advisers into their sub-standard products.
Responding to the ABI’s call for the FSA to introduce regulatory measures to move IFAs away from commission, Hargreaves says insurers have just realised that they cannot operate profitably while paying commission at current levels.
He says: “This initiative is nothing more than an admittance that their members cannot exist by paying sensible commission. They think it is an answer to stop playing commission leapfrog because of their own shortcomings.
“I have always known our entire manufacturing sector has resented every penny of commission they pay us, I did not think they would be daft enough to put their distribution out of business.”
Hargreaves says the ABI’s Caris proposal, in which advisers name their fee up front, is an attempt to “hoodwink the Government” as it would enable trail to be paid up front effectively as trail commission.
He says in all other professions, commission is accepted. “Most professions do not know how to charge fees. Most other professions all charge commission. Isn’t the percentage of the building’s value the architect charges you a commission?”