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Paul Lewis: The shocking prospect of a return to commission

Incentivisation. Encouraging a particular action by offering a reward. Kidnapping your daughter. That would work. Do what we want and you will get her back. Just ask Will Montgomery (Nicolas Cage in Stolen, 2012).

Bribery is slightly safer. Put the contracts my way and there will be something in it for you. It is still a crime, of course, but it became so normal in some international deals that new laws had to be passed to make bribery by UK firms or citizens anywhere in the world illegal.

Earlier this year, 35-year-old Tom Hayes was convicted of conspiracy to defraud for rigging the Libor rate at UBS and Citibank between 2006 and 2010. His crimes made UBS nearly £200m and he earned £1.3m there and even more at Citigroup. He claimed in court he acted with complete transparency and his actions were known, if not approved, up the management scale. UBS was fined $1.5bn by the US authorities.

Hayes was a small part of systematic Libor fixing, which tainted many banks in the UK and around the world. Some people have lost their jobs. But so far only Hayes has been jailed. Just before Christmas his sentence was reduced on appeal to 11 years.

Libor rigging was followed by revelations that major banks had fixed foreign exchange rates too. The FCA fined five UK-based banks, including UBS, HSBC and Royal Bank of Scotland, £1.1bn in 2014 and the evidence showed such activity was endemic. The profits were huge. And of course those involved were earning bonuses: money that was paid, as it turns out, for breaking the law, though prosecutions are still awaited. New laws are being passed to make rigging “systemically important benchmarks” a specific crime.

At the heart of all these dealings are two things. First, there is conflict of interest. Fixing Libor and exchange rates puts the bank in conflict with its customers. It puts its own interests ahead of theirs. Second, there is performance-related reward when that performance is measured simply in money. Or perhaps that is the wrong way round. First, there is personal reward related to making money for the firm, and that leads to the conflict of interest.

So I was shocked to read in the pages of Money Marketing that a Government-appointed panel of experts advising the FCA in its Financial Advice Market Review is considering calling for the return of commission as a means of paying financial advisers.

In an interview on Money Box on BBC Radio 4 last week, FCA interim chief executive Tracey McDermott told me “I wouldn’t rule out an element of commission in sales” if it was recommended by the review and as long as there were suitable safeguards in place.

I used to say that commission was the cancer at the heart of the financial services industry. After 10 years the FCA finally came round to my point of view and from 31 December 2012 no regulated adviser selling regulated or unregulated investment products could earn commission from the sale. Hooray.

But, of course, it did not stop unregulated advisers earning commission from selling all sorts of rubbish. Nor did it end commission on loans or mortgages or insurance products. And the FCA had to step in when some regulated networks of non-independent advisers took cash payments or other rewards for putting firms on their panel of approved advisers – commission by another name. Instead of extending the ban to these other areas, it is now possible the FCA will return commission to everyday retail sales.

The problem with commission is the same conflict of interest between adviser and client that exists in rigging Libor or bribery. If the person sitting opposite me labelled “adviser” has a financial interest in the choice I make then that is a conflict of interest. I can never trust the advice I am given because I do not know whose interest is being promoted by the recommendation they make.

That does not mean, of course, that all – or indeed any – advisers are corrupt. It simply means there is a conflict of interest that undermines the trust between the two parties.

That conflict has been at its worst mainly with non-independent advice given by banks to their customers. I only need say “PPI”. Since the RDR major banks stopped offering customers investment advice in their branches, not least because the FCA intervened and in some cases fined them for their activities.

So what are the banks doing now to “incentivise” their staff to sell us stuff we may not want or need and which may be totally unsuitable? Barclays ended a troubled year with a fine of $13.75m from the US regulator after putting thousands of customers into unsuitable investments and keeping trading discounts it  should have passed on to them. Could it happen here? In the UK the FCA announced in its 2015/16 business plan that it would investigate “inducements and conflicts of interest”. The research was done last year but the regulator has decided to keep the results secret. It will be consulting on proposed rule changes on inducements for the start of Mifid II in January 2017.

So we will remain in ignorance about how banks and others try to skirt round the general ban on commission-related sales of investments and pensions.

Meanwhile, Santander, which was fined £12.4m in 2014 for “investment advice failings” and has set aside £43m for customer redress, will soon have 225 “financial planning managers” in its main branches, selling its own products to customers with more than £50,000 to invest and charging them 2.5 per cent of the funds invested (with a cap of £3,750) for the privilege. They will be able to earn bonuses but Santander says “there is no link to sales in the assessment of this reward”.

Paul Lewis is a freelance journalist and presenter of BBC Radio 4’s ‘Money Box’ programme. You can follow him on twitter @paullewismoney



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It was inevitable the Government would come under increasing pressure to relent on some of the reforms introduced by the RDR.  My own view for some time has been that  life companies, particularly those domiciled in Europe, South Africa and North America, would not tolerate indefinitely having their control over distribution artificially restricted. The concern […]

Tracey McDermott FCA 700x450.jpg

FCA admits it will consider return to commission

FCA acting chief executive Tracey McDermott has admitted the Financial Advice Market Review may reintroduce some form of commission but claims the regulator will not reverse the RDR. Money Marketing revealed last week that the FAMR panel was considering radical reforms in a bid to boost access to advice, including lower qualifications and a return […]


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An influential panel of experts appointed by the Government as part of the Financial Advice Market Review is considering radical reforms to regulation which would roll back key aspects of the RDR to boost access to advice, Money Marketing understands. The FAMR, jointly led by the Treasury and the FCA, is assessing barriers to the provision of financial […]


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There are 37 comments at the moment, we would love to hear your opinion too.

  1. Santander says “there is no link to sales in the assessment of this reward”.

    That’s just not credible.

    Santander have to pay their adviser a salary and, unless they turned into a charity without telling anyone, that means he will need to do something to cover the cost of that salary. The only thing he can do to achieve this is sell their product.

    However you cut that equation, you always come up against the same commercial inevitability. The ‘adviser’ is incentivised to sell. He simply has to be.

    • Not too I’m afraid. I.can categorically say from first-hand experience that there are no sales incentives within the framework used to measure advisor performance in Santander’s new proposition.

      Also, the sales and risk-assessment process used, as well as the guidelines on when to refer to IFAs, are watertight. Because they simply have to be.

      It is a limited proposition and won’t suit everybody, but the costs are transparent and the advice is actually very good value for people with only a basic investment need.

      • so …there are no sales incentives … so if the santander adviser tells every client there is not a suitable investment for them due their age etc … the adviser will continue to be paid the same ? not be put under pressure etc

  2. Yet another one eyed idiotic comment from Lewis. There are cetain advice areas that most advisers cant advise on simply because its unprofitable – regular premium savings and Pensions is the major one and this is where the biggest advice gap is – fees will not work as the type of client that geneally requires this service are either new entrents or lower earners who cant afford the fee and begrudge having 50% of their first 6 months premiums going in adviser charges ( a return to the old front end loading which the PIA abolished) far better to have commission and the charge for this level throughout the life of the plan – What is YOUR alternative suggestion Mr Lewis?????

  3. It is only when the remuneration is paid by the investor to their adviser that impartiality as well as independence is assured. The investor may not like the advice but they have to pay for it and not the product provider. I have been offering true fees (pay me a cheque for my time and advice) since the 1980s and it works for most. The relationship is clear: “I act on your behalf, Mr Client, to represent your interests.”

  4. Now Paul you have the opportunity, with your fellow journalists to create one hell of a stink about this – and I sincerely hope you do.

    This is an occasion when the journalist profession could actually make a difference. I see today that your colleague Tony Hazell is like minded and I would guess that so is Nic Cicutti.

    • No Harry NO !!!

      Good grief man, the public’s live’s are already dominated by the power of the press, able to topple governments, convict the innocent, please don’t invite them into our house to set rules and wield power over our governance !

      I am quite sick of other people’s opinions on how to run my life when they haven’t got a clue about what it is, I do !

  5. Richard Wright – you miss the point – the only way that salesperson will get paid will not be for client centric ADVICE but the need to SELL a product. You expect a product provider to provide factoring services to you so the client doesn’t pay up front, you get paid up front and the provider waits years to recoup his costs. If, as many purport to do, you decry the so called “advice gap” (of which I have seen no personal evidence I might say) then you can still advise, take a fee from each payment and the ongoing fund and over the years you will profit.

    • Not wishing to join your argument, but in the instance of an appropriate product sale being made, the product provider has the benefit of business being delivered to them, without culpability for the advice and without any direct marketing costs, so yes, they should play their part in such an equation. Further, what exactly is the difference between client-agreed commission, paid regularly from the plan and a fee paid by the client on a regular basis, from their plan, assuming that the amounts and charges for the product are the same?

  6. There is no alternative ..that’s why the advice gap has opened in the 3 years since RDR has ever come up with a solution to the problem of how advisers are paid for low premium products

    God forbid the state of protection in this country if commission is banned on Life products.

    Fact:: People will not buy mortgage protection, life and critical illness or PHI products by the payment of a lump sum “fee” to cover the cost of the advice.That’s dreamland…

    • We told them this, they didn’t listen/knew better! 🙂

    • Sorry Snooty, you are wrong. I charged fees on life products for years (More than 10) – absolutely no problem. It is all in how you present it. The figures will speak for themselves. IF there is demand for a seminar on how to do this I will gladly oblige. It really is painless.

  7. So, “Nor did it end commission on loans or mortgages or insurance products”. With ‘Procuration Fee’ arrangements being between 0.30% & 0.34% across the intermediary lending community, where IS the bias potential? Before jumping on the “take a fee from each payment” won’t work, just set up a meaningful sized consumer survey, then come back & tell us how many clients are prepared to pay ‘appropriate’ fees for mortgage or insurance advice & arrangement! Even the highest net worth (assets exceeding £3,000,000) clients in our practice regularly decline fees when offered as an alternative!

    The “Advice Gap” is real, as its potential burden on state coffers when morbidity & mortality affected families/survivors don’t have insurance to fall back on!

  8. The only problem with this theoretically pure argument for eliminating conflict of interest is its application in practice which has disenfranchised the mass market. Including, ironically, the bit where commission is still allowed and which I most care about, which is income protection, critical illness cover and life cover. (Paul B, overall analysis of the market pre and post RDR gives pretty clear evidence of an advice gap at the lower premium end.)

    The move of investment advice to fee-based only, means those who can’t afford (or the many more who just won’t swallow) the up-front costs of advice are no longer seeing advisers. Or advisers won’t see them, if they are not financially viable for them, now that cross-subsidy is no longer a norm.

    These are the people for whom advisers would have had a duty to address their protection needs, regardless of the relatively poor return on the effort involved in these product lines. So at a time when the welfare net has shrunk and average households’ financial resilience is at the lowest in a generation, (and PPI mis-selling has tainted the whole area) people are just not getting protected or are going down non-advice routes which increase the randomness as to whether they are getting the right thing.

    So whilst commission-based remuneration has its clear risks and has undoubtedly been abused in the past, it nonetheless has a useful role to play in getting advice to people who need it and would otherwise have none. When personal disaster strikes and your policy pays out, you don’t really mind that someone got a commission for selling it to you. Better that than no policy to pay out when you need it.

    So coming back to investment, if “low-ticket” business starts getting picked up again through the re-introduction on the investment side of some moderated form of commission/safe products mix, I wouldn’t think it the end of the world.

  9. I like Paul Lewis – always willing to engage, especially on Twitter. But…….

    We see regularly, since RDR was introduced, articles about pension freedoms and how much of a ‘pickle’ people may get themselves in by ‘DIY’. Why is this more likely? Because a great amount of the general public can’t, or won’t, pay for advice. So, that’s where commission, as an OPTION for the client would still make sense.

    The alternative is for the general public to perhaps suffer even greater financial loss by ‘doing it themselves’.

    Now – Mortgages. I’d love to be able to trade solely on client fees and negate the need for lender commission. But, for that to happen, we’d have to change the general public opinion on ‘paying’ for mortgage advice.

    Guess what? For about a decade many journos, like Martin Lewis, were actively discouraging mortgage borrowers from going to a fee-charging mortgage broker.

    If lenders stopped paying commission to mortgage brokers, then yet again, as with RDR, more borrowers would try ‘DIY’ instead of paying for advice.

    Let’s not touch on the fact most lenders pay a lot less commission now than they did eight years ago – when workloads are far higher….

  10. Got to say that after all the pain of RDR implementation I am surprised and disappointed in the suggestion that commission will be reintroduced.

    Watch all the banks & pension companies line up to offer this ‘new ground breaking service’ that ultimately screws over the client. Normally I would not care and focus on my clients and service. However every time some blood sucking s#%t runs one of their scams we as IFAs suffer under the banner of ‘youre all the same dodgy salesman’.

    I can hear it now from the regulators; Its different this time, lessons have been learnt, we will closely monitor the situation, the companies have a new culture, there will be no financial incentives paid, etc etc. No they wont. Time to grow up and smell the coffee. This is ground hog day and I, like many other am sick and tired of my name, ethics & business being questioned by people who clearly have no original ideas or even understand the market they proclaim to represent.

    I understand the need to fill the advice gap as it as never been as obvious but the sale of a product with commission generated is absolutely stupid, a scandal in the making and a backward step. Dealing with the source of all the expense of giving advice such as PI risks, compliance, the long stop, capital adequacy even robo advice processes makes a lot more sense.

    I dare not even mention the mind numbing irrationality of FSCS and their decisions as they clearly left planet earth a long long time ago. Can you imagine the field day FOS would have with our new commission generated products and the poor ‘sales’ that will follow?

  11. I understand people need to save more but it’s not that hard to call a provider up directly go through the process to set up a regular premium pension or ISA and follow the advice tree for picking a fund. A client came into us last year to pay a £100 per month into a pension and I advised exactly that. She popped back the next day to say thank you, she did it all over the phone and said how easy it was. I said in a few years if she wanted to pop back for a quick review I will provide this at no charge. Most clients just don’t know where to start, with abit of guidance from a friendly adviser you can help them. Rather give a client 30 minutes of my time for some generic advice than tell someone I cant help.

    I cant understand why banks don’t offer this execution only advice as a free service and not charge. Better to help a client and retain them than lose them.

    • Yep, but in doing so, did you inadvertently take on a risk you have not paid for? I’d do it for a client, someone I know or a family member of a client, but not someone off the street, just too much risk.

  12. Of course Mr Lewis, all “independent” advisers are charities and their earnings are completely independent of the advice they give………..not!
    ALL advisers, independent or not, end up earning more money the more they are able to SELL their recommendation(s) to the client. It’s a fact of life and there is no solution to it. And whilst hourly fees are a step closer, unfortunately the man/woman on the street does not like fees in any form and prefers commission to be paid to the adviser. Charge them fees and they’ll think they can do better themselves……..
    And yes, the RDR was all down to you Mr Lewis and it has been a roaring success for ordinary people………….
    I don’t think I can read your articles anymore…my job is stressful enough!

  13. Paul I’m responding as an IFA and in my opinion the only thing was wrong with commission was bias created by allowing a variations being permitted between providers. If the FSA instilled a level playing field then the unscrupulous would have been dealt with cheaply and easily and we wouldn’t have the same advice gap as we do today.
    By changing things to an uncapped fee structure, allows the dodgy to earn even more. I cant believe that this point has not been picked up on. Its almost as if a rip off fee is ok as its a fee and that’s professional! I live and work well in the new ‘Professional World’ but the reality is in many instances clients are not financially better off because of this and no one wants help the lower end of the market which is a crying shame! Progress indeed!

  14. This article deeply saddens me as I used to credit Paul Lewis as an expert in his field. Now I understand he must just have a good face for TV and voice for radio.

    His comments show a deep lack of knowledge “At the heart of all these dealings are two things. First, there is conflict of interest. Fixing Libor and exchange rates puts the bank in conflict with its customers. It puts its own interests ahead of theirs. Second, there is performance-related reward when that performance is measured simply in money” – no Paul, the two things these have in common are 1. They are criminal activities 2. They are mechanism to worsen the outcome for customer while improving the outcome for the institution.

    Comparing this to commission is idiotic, stupid and pathetic. It shows a lack of understanding about what happens in the real world and frankly you should know better.

    Commission works all over the world, in all industries and for all types of product / service. Commission works for those who can’t afford to pay for advice and it serves as an incentive for advisers to go out and find new, lower income clients.

    The FAMR is the only real review that concerns itself with creating better outcomes for customers who needs advice. The RDR made a big mistake in banning commission and hopefully the FAMR will put that right.

  15. Client agreed remuneration/Commission/Fee – is it really worth all the fuss and additional regulated expense that we as advisers have to pay towards and the clients bear the cost of eventually? As advisers amounts are disclosed upfront in £’s and agreed with the client with a choice of payment options, as a fee or via the product provider. Agree with Lord Snooty, certain products and clients protection needs are more important to their financial security should anything untoward happen, and far far better for them to have protection paid via commission than forego valuable protection because they can not afford to pay for advice…

    Another Financial Storm in a teacup!

    However, Mr Lewis seems to make more reference of the banks and there internal advice problems of the past… we all have opinions on the banks and their failures.

    Unfortunately out regulatory system lacks prevention, so it creates from it’s own set of rules further problems that most industry experts would identify before they occur… PayDay loans is a prime example…

  16. Can Lewis confirm that he works for free as a ‘freelance reporter’ for the BBC?
    Yeap didn’t think so!!!

  17. The issue is not fee or commission. On their website they state

    There is a cost for our Financial Planning Service that is only charged should you accept our recommendations and choose to invest with us
    The advisory service fee is 2.5%. Really they are playing semantics with the word fee/commission.

    What we should ensure that they don’t play the semantics with the word financial planning.

    If you read the proposition they are just investment salesmen who are using the disguise of financial planning. I am sure this time client will be made made aware that they can track their fund 24/ 7 on their platform. If the have any concerns about the platform or its performance written within the terms and conditions will be a clause that is the responsibility of the client to approach Santander there and make an appointment

    That is not what financial planning is all about.

  18. Jut as an aside, it’s funny how Tom Hayes was the only one convicted and yet he was the one diagnosed with Asperger’s. Tends to suggest to me he was the fall guy. Not saying he wasn’t guilty, just less culpable perhaps than some of his seniors.

  19. The transition to adviser charging for lump sum investments has been relatively painless and (to the best of my knowledge) works pretty well. The proposal to reintroduce commission is focussed primarily on the inability or unwillingness of people of modest means to pay a separate fee for the provision of advice on regular savings plans such as ISA’s and pensions.

    Secondly, endowments and MIP’s (those which paid term-related commission) are now pretty well extinct, so there’ll be no commission bias on those fronts.

    Thirdly, no one is suggesting a return to term-related commission on PP’s. What I think is most likely to be sanctioned is a system of indemnified adviser charging, facilitated perhaps by a (not drastically) reduced allocation rate for the first couple of years. When Skandia launched their series 6 PP contract, which allowed for an adviser charge of up to 25% of the first 2 years contributions (with no indemnity facility either), my reaction was: I can live with that (and I’ve always hated clawbacks of indemnity commission).

    It’s simple, transparent and easy to understand. My clients were/are entirely happy with it as an alternative to having to pay a separate fee. Okay, I might charge them a nominal upfront fee for my pre-sale advice, if only as a declaration of serious intent, but nothing like as much as the fee I’d have to charge for the entire process. The sums involved and their effect on the sums invested are completely clear. There are no penalties for early suspension of contributions, early transfer elsewhere or early vesting. Perhaps, under this new system, upon very early suspension of contributions, it’ll be necessary for the accumulated fund to be debited with any outstanding balance of customer-agreed initial adviser charge/s, but that’s only fair to the adviser who’s done the work for which he’s been contractually engaged. Why shouldn’t such a system work and why should it herald a return to the bad old days of commission bias in search of the highest possible upfront payment?

    What methodology, Mr Lewis, do you suggest instead as a means of tackling the advice gap facing those of modest means who really should and quite probably do want to embark on some sort of regular savings programme but who are unable to pay separate fees?

    And another thing ~ the dodgy practice of some networks demanding under-the-counter payments for adding certain providers’ products to their panels is history and, in this context, a complete red herring, so why mention it here?

  20. Trevor Harrington 14th January 2016 at 11:01 pm

    Paul Lewis, and some of the correspondents above would be better off living and working in a communist state. I am particularly surprised at you Harry – you had your own business and presumably you employed people who worked for you because you paid them to do so, as well as the love of your own persona, of course (?) … and presumably, over the years, you “let some go” who did not perform to your financial model.

    If you want to disentangle the entire concept of work and reward, then I am afraid that is the only way that it can be done – go and try living in a communist state (I would recommend Korea), and you might also like to cast an eye around the rest of the World as well, just to see just how successful communism has been over the last 100 years or so. In fact, if you really look around, there are also some very good examples of socialist policies in our own Country that might bear your balanced and critical examination as well (not).

    Those of you who want to discuss your pompous elitist opinions about the superiority of fees versus commissions, verses salaries and bonuses, versus incentive schemes, versus self employed and employed and all the other garbage of self opinionated views of what you think is ethical, correct, incorrect and biased due to the influence of “money” … may I suggest that you clear off to one of the Communist Countries that you have found through the above instruction … and stay there.

    Financial reward is the only one that we have, and no matter how it is presented as motivational force, the issue is how it is balanced with quality control, management, care and diligence, and above all else, a clear motivation for the long term client relationship and client benefit, where the client’s best interests are paramount to both the company and the salesman … which incidentally … we all are … salesmen.

    Management is the key my friends ….. not this vacuous discussion about how money (commission?) is used to motivate people … that is just currency and geography.

  21. I’m curious Paul, what is the difference between commission and a provider enabled fee?

    The answer assuming both are fully disclosed, is NOTHING.

    I’m curious as to what the problem with commission is? As long as it’s disclosed and is the same across the board regardless of which product/provider is recommended, what exactly is the issue?

    The client knows what they are paying, the adviser knows what they are getting paid, the issue is what?

    The only issue, is when different providers offer higher rates of “commission”, so it’s very simple, you pay commission at flat rates, which are standard across the board and where the format of the commission is exactly the same. You give the client the right to cancel the ongoing “commission” if they so chose.

    The ONLY people that lost out with the banning of commission were clients and the only ones that gained were HMRC.

    So i can only conclude Paul, that your in favour of poor client outcomes and the taxman taking more, or that you don;t know what your talking about..

    Which is it?

  22. Look lets be honest with ourselves we know ( our at the very least have a bloody good idea) that both regulator AND government knew exactly what was going on why do you think their eyes were diverted in our direction ? there are 3 very real culprits for this, The treasury, pulling the strings, Sants, as the man in the know, and McDerrmot to supervise, and then on to enforcement (when Cole left)

    Did they rest in the thought that if it all blew over and return to normal all was OK, and if it didn’t ……. well they could deny everything and blame the next down the line till you end up with some poor sod with the world and its uncle on their shoulders ?

    Everywhere you look on this whole banking mess, is the real fact its littered with deniability from top to bottom and from side to side, all apart from the poor guy serving porridge !

    As for Mr Lewis and the story (fable), Has commission really left ? or is it just called another name !

    If you want to fixate on a word and write a column on it my I suggest, Fortitude !

  23. Seriously, does anyone actually take any notice of this bloke – another who theorises but has not got a commercial bone in his body much less his brain.

    Its a commercial world everywhere except in regulatory (and Lewis’s theoretical) la la land where commercial considerations don’t need to exist – why would they ?

    Getting fed up with the broken record yet

  24. Spread the fees over 12 months, yes, return to commissions, no. I don’t care how you dress it up, we have been told for a decade by the regulator that advice needs to be paid for via a fee, as consumers believed commission was free and it was open abuse. Please tell me what has changed? How does commission make lower net worth consumers profitable, are the costs going to change, is the provider going to reduce their profits, does the liability reduce, no!

    This is nothing more than the regulator back tracking to save their own hides, as they would not listen in the first place. If they back track now they have wasted billions of the industries money. I am also very concerned at the suggestion of lower qualifications, investments are complicated, which is why the regulator insisted in pushing through the higher qualification level.

    This frankly is shameful if allowed and a full review should be undertaken to see why the regulator feels it necessary to back track so soon after insisting RDR was right, commission was the route of all evil and in forced by them.

  25. When the FSA was searching for facts to back up its ‘commission creates bias theories’ it instructed Charles River Associates to conduct a thorough investigation.

    Their subsequent report stated that some bias had been found regarding endowments and with profit bonds but that the matter was really one of perception.

    Is it a fact that every commission-based product that I sold was dictated by the reward and not the quality? The problem is with the ethics, or lack of, of the individual. Don’t punish me for the crimes of others (a mantra that fits nicely with the nonsense that is the FSCS levies).

    Far too many people are under-insured and have little or no retirement savings. If the banks are able to help bridge these chasms then I say good luck

  26. Trevor Harrington 15th January 2016 at 7:59 pm

    The simplest solution to the entire discussion is, as is always the case, the simplest remedy.

    1) Maximum “commission” agreement (MCA – I suggest 3% initial plus 0.5% trail) – allowing for any excess charge or fee, which is required by the adviser firm, being charged directly to the client.

    1) Hard disclosure of the initial charge (commission), and the ongoing charge (Trail), including any excess adviser charge over and above the MCA (above), being clearly declared on the front page of all compulsory illustrations, where the ongoing and the initial fee or “commission” is sourced from the product.

    2) Absolutely NO indemnity terms, which impact on the clients investment (allowing for commercial third party payment terms if desired by the adviser firm).

    3) Compulsory pay down (sharing), at a set % rate, of the trail or the renewal (ongoing adviser fee) directly to the specific adviser who is dealing with the client, and a compulsory client ability to stop, start or redirect that payment if he/she so desires.

    4) Compulsory annual statements (in arrears), from the adviser firm, directly to the client showing ALL revenue received by the adviser firm from the clients’ investments, INCLUDING fees that have been charged directly.

    Sorted …

  27. I would have no issue with fixed commission rates.

    IMO, the FCA need to focus more on retention rates and complaints. Two sure signs that things are not working.

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