IFAs reject average commission

IFAs will not reduce commission levels to fit in with the FSA’s market averages, according to research from Aifa.

Its IFA Census shows that around 80 per cent of IFAs intend to maintain maximum levels of commission across the product spectrum despite Office of Fair Trading concerns that firms might use the market average to co-ordinate pricing or commission.

The research also shows the FSA’s market averages for single-premium bonds and lump-sum collectives are significantly lower than market averages for other products.

Thirty-three per cent of IFAs say the market-average commission for lump-sum collectives is less than their maximum commission while the corresponding figures for single-premium bonds is 34 per cent. This compares with 4 per cent for annuities and 5 per cent for single-premium pensions.

Aifa director general Fay Goddard believes the FSA’s data collection in these areas needs to be examined and says industry discussions are already in progress. She says: “It is encouraging that firms are prepared to maintain their level of commission. IFAs should charge what they are worth.”

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