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Ivan Massow trail closure to come under BBC Money Box spotlight

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The closure of Ivan Massow’s trail commission return business is set to be scrutinised by a BBC Money Box programme tomorrow.

The programme will feature an interview with Massow about the venture and why it failed, as well as adviser interviews about trail commission generally.

Massow announced last week that the service, Paymemy.com/mission, would be closing, citing escalating regulatory and professional indemnity costs. It launched in 2011, offering to return 80 per cent of a client’s trail, whilst keeping 20 per cent.

An email to clients initially stated the firm would retain all future trail income unless the clients moved. It said: “You could do nothing – but we will not be able to rebate any commissions we receive, and will keep them…. This may be useful for people who get little or nothing back and quite simply can’t be bothered to move their affairs.”

Massow has since clarified the firm will look to deregister at some point, with any trail not moved by then kept by the insurer.

Massow, a former IFA, told Money Marketing this week he faces personal losses of £200,000 as a result of the closure.

Tomorrow’s programme will be the third time BBC Money Box has covered the trail commission debate. It first looked at the issue in September 2011, dubbing it “one of the industry’s best kept secrets” and sparking a series of open letters around whether the receipt of trail was justified.

Money Box returned to the issue in January this year, questioning why advisers should receive ongoing commission for pre-RDR business without offering an ongoing service.

BBC Money Box will be broadcast on Radio 4 tomorrow at 12pm.

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Comments

There are 14 comments at the moment, we would love to hear your opinion too.

  1. I do hope that this business failure won’t cost him his home, otherwise he may be forced to camp.

  2. wewilltrouseryour.com(mission).

    A true side splitter, can’t wait for Money Box to cover this. Thanks for the ongoing amusement Ivan.

    What’s next?

  3. Why doesn’t the FCA tell him he must deregister NOW. All clients become orphan, the provider will write informing them, retain commission and the provider will encourage the clients to appoint a new adviser. Simple.
    How can the FCA allow Mr Massow to keep the commission unless the client chooses to move? It is worse than what he was accusing non servicing advisers of doing who have infinite liability via the FOS and have to retain the file to infinity. Is it that he is bust cherry picking what he can sell on before deregistering?
    I suspect so as it is what I would expect him to do in order to try and reduce his loss from £200k, but at whose expense? He offered a service which he is failing to deliver. Get out NOW Mr Massow, don’t keep the money under false pretenses.

  4. Let’s hope that there will be a measured discussion rather than simply suggesting that on ongoing ‘trail’ is in itself a bad thing.

    Furthermore, perhaps an acknowledgement that some advisers seemingly took trail INSTEAD of initial commission and that, in doing so, the cost to the client may well have been neutral.

    The whole trail debate is much too complicated for it to be a black and white matter however the existence of it should be something consumers are aware of.

  5. Money box will use this as a further excuse to slate IFAs’

  6. So much hot air!

    So much misguided comment and so little knowledge or understanding.

    Whether Journalists or anyone else likes it or not, the facts are:

    1) Regular premium Pension, Endowment, Whole of Life and Term Assurance plans all historically paid ‘Renewal’ commission, not ‘trail’, and this was built in and was part of the individual Companies terms of business at the time the business was written. It was included as an incentive to ensure that the introducing agent did what they could to ensure that the policy renewed, ‘hence ‘renewal’ commission It is based on the premium paid and ceaces to be paid when the appointed adviser is sacked by the policyholder, or if the introducer is no longer in business or authorised, in which circumstances, the terms of business were clear that the benefit remained with the Insurance Company, or could pass to a newly appointed agent.

    2) ‘Trail’ commission was arrived at by ‘sacrificing’ a part of the initial commission which would otherwise have been paid to the introducing intermediary. Leaving aside any discussion about the merits or otherwise of this and the commission system generally, the anticipation that this was to ‘service’ the client’s future needs was never a part of the original deal, as it was originally constructed. It was seen by most IFAs as a sensible way to pay for such servicing and to build up value in the business, but was costed by the Life Companies as a part of the ‘commission menu’ on offer to IFAs. Thus, the whole precept of the message “Are you paying for service you are not getting is misguided and innacurate, but of course, is all a part of the whole system of commissions and demonstrates why it had to go, and should have been stopped years ago.

    3) The nonsense spouted by Massow as the reason for his business failing should be challenged. I believe, as we probably all do that FSA/FCA costs are far too high and are largely unjustified, but a sound business can and will survive and propser. His has failed because it was not sound, and was based on a poor business plan and unrealistic assumptions.

    End of Story.

    I hope that this is brought out in ‘Money Box’, but I’m not holding my breath!

    I’m more than happy to see the FCA held to account for the wrong decisions they do make and the profligate spending we all see, but you can’t pin this one on them.

  7. Nicholas Pleasure 30th August 2013 at 2:42 pm

    Masows grubby little venture was all about damaging IFA’s ongoing income and client relationships.

    It has failed for three reasons:
    1. Most IFA’s earn their trail by providing a service that clients value and are prepared to pay for.
    2. He didn’t do his research about the FCA’s view of trail.
    3. He forgot that insurers are even greedier than he is.

    I smiled at that £200K figure. I suspect it may cost him much much more.

  8. Jimmy Somerville 30th August 2013 at 2:48 pm

    Perhaps next time Mr Massow is planning a business he might take a top down approach to rather than bottom up.

  9. The commission paid by fund managers was not discounted. You could choose up to 3% and, in most cases, 0.5% trail was the norm. However, with the likes of investment bonds, and with the ludicrous initial commissions on offer, you could offset initial and receive trail instead. I always chose the latter as I always had the incentive to “look after” my clients and my persistency levels reflect that.

  10. incompetent regulators 30th August 2013 at 3:34 pm

    Oh I see now Paul Lewis from Money Box wants to distance himself and his programme. Bit late really although most people are fickle and have short memories so Lewis will get away with it.

    That’ll teach you and the BBC for supporting minority groups!!

  11. Why is this chaps failed venture getting so much coverage by MM?

  12. Anyone else but Massow would have politely declined the invitation.

    This man seems to court any sort of publicity. Good or bad. And we thought we had big egos!
    It will be interesting to hear the oleaginous excuses. Will this be another scrape from which he escapes unscathed?

  13. Paul Lewis may consider he’s had a bum rap.

    Let’s see.

  14. To Richard @ 30 Aug 3:13

    I agree with what you have said. I always explained to clients that I would take much less initial commission, in exchange for trail, as doing so would give any decent IFA the incentive to choose a product that they believed would perform well and they would have an ongoing interest in it doing so. I never had a single client say that they did not think this made sense.
    I did the same thing with a couple of the providers that did offer higher unit trust initial commission in return for no trail. This was not a ‘holier than thou’ approach, it just made sense.

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