Money Marketing welcomes the much needed clarification from the FSA in this week’s issue regarding the status of legacy trail commission after 2012.
March’s RDR policy statement appeared to call into question whether trail commission could continue to be paid in the event that an adviser firm is sold on. There were also concerns expressed about the status of trail commission if an adviser joined or left a network.
Whether this move is the correction of sloppy drafting in the March paper or a genuine U-turn on an ill-thoughtthrough policy, it will allay concerns about the saleability of adviser businesses or future restrictions of movement.
The clarification on the range of firms allowed to offer loans to advisers after 2012 is also welcome. Banks, IFA networks and product providers will be allowed to offer loans on commercial terms as long as credit needs are based on overall income rather than income generated via a particular provider.
We still believe the FSA is wrong not to allow factoring alongside measures to ensure provider bias is not retained. We shall see whether the greater flexibility over who can offer loans will be of benefit to IFAs.
At times, the FSA has shown it is willing to listen and act on the concerns being expressed by the industry, for instance over alternative assessments. With just over two and a half years until the implementation date of the RDR, the FSA needs to continue to listen.
The RDR is a huge structural reform which is inflicting massive costs on our sector at a very difficult time. The FSA cost estimates have already skyrocketed from their original figures and great strain is being placed on many small and large businesses.
The large numbers of advisers signed up to learning academies or currently taking exams shows the willingness of the IFA sector to engage with the FSA over the RDR.
Advisers are moving in the right direction but they need a thoughtful and pragmatic regulator to help oversee this huge step-change in the industry not the school bully that sometimes comes to the surface in certain FSA papers and speeches.
A good start would be for the FSA to commit to specific regulatory dividends for firms meeting the new requirements and a fundamental reform of the FSA’s fee structure to better reflect the risk IFAs pose to the market.