Openwork marketing and propositions director Philip Martin wants the FCA to review rules which prevent advisers retaining trail commission on non-life products after completing a fund switch.
Under RDR rules, advisers are allowed to retain trail commission if they complete a fund switch in a life company product. However, this is not the case for non-life products such as Isas or general accounts.
Martin says the rule is an “anomaly” and urges the FCA to review its approach to legacy payments to advisers.
He says: “If you give advice to change a fund within anything other than a life company product then trail is switched off. So if you do a fund switch within a life company’s pension it is not a problem, but if you do it within an Isa or a general account that is paying commission then trail is switched off.
“It makes no sense that different tax wrappers are treated in different ways and we think the FCA needs to look again at that issue. Ideally, trail would remain across all product types, but the bigger issue is achieving consistency.”
Martin also wants the FCA to revisit its approach to advised top-ups.
He says: “If a customer decides they want to top-up with advice then it has to go through adviser charging. But if they do it themselves trail commission could still be paid, which again is totally anomalous.
“The problem is you are going to see a trend towards non-advised in order to retain trail.”
An FCA spokeswoman says: “We are monitoring how the market evolves following the introduction of the new rules and will formally review whether the rules are working in the way we expected as part of our post-implementation review next year.”