The FSA is trying everything possible to stop IFAs from trading. Its latest wheeze is to stop all commission.
If it stops commission, what then? It will disadvantage the public, the vast majority of whom choose to pay advisers through commission, not least because it is easier and to their advantage to do so.
It is just as possible for dishonest advisers to skew fees as take inflated commission payments.
If the FSA wants the banks to look after the public, is this because of their exemplary past track record in such areas? The FSA has a very short memory of the financial services misselling culprits.
What will happen to all the commission that the ABI members will be saving? Any bets on it going to our clients rather than their shareholders? I think not.
What will happen to the existing trail? This is paid by dint of a legal contract and cannot be stopped arbitrarily by the FSA. Why is the FSA even getting involved with this? It is there to regulate and, as far as I am aware, does not have the remit to decide how much advisers are remunerated and to ride roughshod over what is meant to be a competitive environment. After all, that is why the MCA was abolished.
If it is concerned about unscrupulous advisers, why not bring back the MCA? It will, of course, understand that this, in turn, will yet again disadvantage the public, as the honest adviser cannot use the “excess” commission to enhance their client’s investments.
So what happens if commission is axed? The public will have to pay for advice by way of fees, which means fewer people will seek advice in the first place. There will be fewer IFAs about so the banks will be able to take full advantage of a public without the benefit of independent advice, so yet another misselling scandal will occur in due course.
Not being philanthropic organisations, the ABI members will pocket the savings they make by not having to pay commission.
As an aside, it always amazes me that the banking fraternity and, for that matter, the regulators, earn huge sums of money and massive bonuses without the regulator saying this is wrong.
The reason always trotted out is that they are earning a competitive income for what they do. Yet the regulator will not leave us alone. Why? The FSA must stop this nonsense before it is too late. Regulate the dishonest adviser and leave the rest of us alone to serve our clients through independent advice.
DBF Independent Financial Services