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‘No evidence to back easing the ban’

The financial services industry failed to provide any strong evidence to support its call for a relaxation of the ban on legacy commission, according to the regulator.
In its consultation paper on the treatment of legacy assets, published last week, the FSA confirmed that trail commission for ongoing advice can continue but legacy commission for changes to existing products after the RDR will be banned.

Product providers argue that huge system changes are needed to comply with the ban, which could force providers to stop accepting top-ups altogether. They add that where top-ups are accepted, consumers will end up paying twice, once through the adviser charge and once through commission factored into the price of the product.

But speaking to Money Marketing last week, FSA head of investment policy Peter Smith said: “Although a number of people have suggested to us that we should change the rules, nobody has provided any substantive evidence to us to support that argument. People have asserted the problem, but not substantiated it.”

Association of British Insurers director of financial conduct regulation Maggie Craig says: “This could have unintended negative consequences for consumers with existing investments.We want to ensure existing customers are not adversely affected and will work with the FSA to make sure consumers understand the changes to the advice landscape after December 31, 2012.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Or, to put it more accurately: “nobody has provided any substantive evidence of which we’re prepared to take the slightest bit of notice, because we hold all the cards in a brazenly rigged deck and there’s nothing anyone can do about it, so stop whingeing and just get on with it.” In all probability, the FSA quite deliberately doesn’t want it to be viable for investors to top up existing products. Thanks very much.

    Nothing new there, then, other than to provide yet more evidence, were any needed, of the urgent need for the creation of an Independent Regulatory Oversight Committee with the power to instruct the FSA: This is wrong and you’re not going to do it.

    We live in hope, if not expectation.

  2. @ Peter Smith – The simple solution is not to have “Consultations” and Policy statements going backwards and forwards and being ignored or donwvalued by the FSA, but for the FSA to be the open and honest regulator they claim to be and engage with those who raise their concerns.
    If someone makes a suggestion to change the rules, but fails to give you (FSA) the level of evidence you require (what is the correct level when the FSA have all the stats from all the Gabriel and other reports and any they don’t have they can DEMAND from the ABI or IFAs), then the simpel answer is for the FSA to debate in OPEN forum the issue which has been raised so that ALL can see the reasonoing of both parties and then the conclusion reached.
    I am not arguing for or against a legacy ban, I would just like to see that any decision is NOT made by a star chamber with debatble reasons for comingh to their conclusions. Actually I correct myself, the word debatable is inappropriate as the FSA don’t engage in any kind of brainstorming to identify problems with their plans and to ensure each is addressed. and these ARE there plans, there is no industry putting ideas to the FSA that they then decide to run with, this is lobbiest I suspect lobbying the FSA who then formulate a plan which “consultation” papers fail to engage as it is a limited debate.

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