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HSBC reviews trail commission payments after FOS ruling

HSBC is reviewing its trail commission payments from pension savers after a Financial Ombudsman Service ruling ordered it to refund a client.

In August, the bank was forced to repay the trail commission to a client, Mr J, because it was not providing ongoing advice.

Experts have warned the case could open a “huge can of worms” because many other advisers and banks are in similar positions.

They argue some trail commission was not designed to pay for ongoing advice but to act as initial commission spread over a longer period.

A HSBC spokesman says: “The circumstances surrounding this case are very specific, but as always with FOS decisions, we will review our portfolio to identify if there are any other customers in the same situation.”

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  1. Can I suggest before commenting on the case, everyone actually reads the FOS decision itself as I suspect most advisers will then find they agree with the decision, but it sets no precedent.
    Case number DRN7413808 http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=54607

    If the contract clearly states the initial and ongoing trail was for initial advice only, that is a contract.

    I suspect however the HSBC trail was for an initial AND ongoing service and it would be helpful if HSBC confirmed if that was the case or not. Surely that information was supplied to the Ombudsman and whilst his report is very good, it is a pity it did not comment on that.

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