Leading distributors have hit out at providers for a lack of consistency in how they facilitate adviser charging, saying poor provider support has made for a “frustrating” start to the RDR.
100 days into the RDR, distributors say providers are struggling to cope with the move to adviser charging, particularly where clients want to pay their advice fees through the product.
Outgoing Tenet group distribution and development director Keith Richards says: “Advisers are becoming increasingly frustrated by adviser charging inconsistencies and the treatment of trail commission by providers and fund managers and have been reporting poor levels of support when calling the various support lines.
“It would seem providers have been far less prepared for the RDR than the advisory profession with feedback that support staff have often been confused about which products can facilitate adviser charging either for initial or ongoing fees.”
In Partnership joint deputy chief executive Gordon McNeill says: “We have experienced an inability to cope with advisers’ fee models and an inconsistency on trail commission from a number of providers.
“Advisers are agreeing a respectable fee, which clients are willing to pay, but getting paid is proving difficult and is taking longer.”
Sesame Bankhall Group chief executive George Higginson says: “The lack of consistency across providers was always going to be a challenge for advisers to get to grips with and this has been borne out by our experience so far this year.”
Almary Green managing director Carl Lamb suggests some providers have used the RDR to rewrite their terms of business to give themselves “a bigger slice of the pie”.
He says: “Cases are happening where the client is still paying the same to the provider, which would have included the adviser’s commission before RDR, without passing anything on to the adviser and then paying the adviser separately for the advice. Treating customers fairly? I do not think so.
“By adopting an aggressive attitude to the RDR’s charging rules, providers are making advice more expensive and could end up pushing some clients away from the advised route down to direct sales, and may ultimately force some IFAs out of the industry.”