Allium Capital has warned advisers that life companies are trying to “dramatically increase” their margins at the expense of advice firms.
Managing director Ronan Kearney says life offices are taking advantage of the FSA’s ban on commission and platform rebates under the RDR.
He says the move will put up to 0.75 per cent of an average 2 per cent investment charge up for grabs.
Kearney says: “This is at least £1bn of revenue during the next decade. There is a clear strategic drive to re-establish life companies at the centre of the assetgathering industry and to dramatically enhance their margins at the expense of adviser firms.” He says he has seen several life offices refusing to add funds to core ranges unless they are managed by their own fund management arms.
Association of British Insurers assistant director of consumers and distribution reform Peter Jolly says: “ABI members do not seek to retain rebates at the expense of advisers. Under the RDR, independent adviser firms will be prohibited from receiving reb-ates or any forms of commission but it is not true that providers stand to gain from this.”