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IFAs want ruling on commission rebates

IFAs have called on the FSA to clear up confusion over whether rebating commission counts as handling client money.

Aifa says it has had no response from the FSA over the question of whether IFAs who want to hand back commission would have to apply for separate authorisation.

The distinction is crucial since it could hinder intermediary decisions over depolarisation and also increase professional indemnity insurance premiums because firms that handle client money are deemed to be higher risk than firms that do not.

But the FSA says the matter is not clear. Advisers are expected to deduct commission they would get from the fee they charge to the client so they would not effectively be handling the money.

However, where this does not happen and cash is passed back to the client ,it is unclear whether the IFA would have to apply for permission to handle client money.

FSA spokesman Robin Gordon-Walker says: “It is possible that in this second scenario you would have to have permission to handle the money.”

Aifa director of policy Fay Goddard says: “We have been pushing the FSA on this matter, asking them to clarify the situation. We urgently need confirmation.”

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