The regulator says it will revisit the issue of whether non-advised business should continue to pay legacy commission if problems emerge as a result of the retail distribution review.
In its consultation paper on the treatment of legacy assets, published last week, the FSA stated legacy commission where changes are made to existing products after the RDR will be banned but non-advised sales can continue to receive additional commission. The FSA says once the rules come into force, firms will have to ensure additional commission is only paid on non-advised sales.
Speaking to Money Marketing last week, FSA head of investment policy Peter Smith defended the decision not to impose the ban on non-advised sales.
Smith said: “The question we have been trying to answer is, should we change the position for advised business? We have not conducted the same sort of in-depth analysis to examine non-advised business.”
Smith added that if biases emerge in the non-advised market after the RDR, the FSA could look at introducing further rules on non-advised sales.
He said: “We have said countless times over the last 18 months since the adviser-charging rules were made that if we see issues or problems emerging in the non-advised area as a consequence of the RDR rules then we will obviously have to consider what the right response should be.”
Thameside Wealth director Tom Kean says: “If a contract is set up between an adviser and a client to include payment for additional investments, the FSA should not be allowed to muck about with that just because it has problems with the word commission.”