Concerns over how legacy business should be treated after 2012 is the RDR “elephant in the room”, according to Fidelity International.
Speaking at a Money Marketing round table on adviser-charging last week, head of UK fund partners Ed Dymott said: “The FSA has given some high-level principles on the treatment of legacy business but when you get down to the detail, the level of interpretation can vary between providers and platforms to the extent that we end up with completely different outcomes.
“There is an industrywide concern at the level of detail on when do legacy assets become subject to the new rules.”
Dymott cited the example of the implementation of a model portfolio that was agreed before December 31, 2012, saying it was unclear whether the FSA considers changes to the portfolio as new advice or existing advice.
Money Marketing revealed in March the FSA had written to trade bodies to clarify its view that legacy commission will be banned under the RDR but trail commission will remain.
The FSA defines legacy commission as additional commission payable under a contract signed before December 31, 2012 but paid as a result of an event that takes place after that date.
Syndaxi Chartered Financial Planners managing director Robert Reid said: “The great difficulty that life offices have is changing anything because they are running off one back-office system. I am concerned the life offices have not pushed the regulator enough for the details because they need to time to build the systems to cope.”
Tax Incentivised Savings Association director of policy Malcolm Small said: “The insurance companies and providers generally do not understand that their legacy commission systems will not support adviser-charging.”