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Research claims to show bond commission bias…

IFAs have shown significant evidence of commission bias when choosing between providers for with-profits and distribution bonds, according to an FSA report although it admits the markets is not riddled with bias.

The research, by Charles River Associates in October last year, is published as part of consultation paper 121. It claims to reveal some evidence of product bias in the IFA market, with some advi-sers alleged to be inappropriately choosing unit-linked bonds over Isas.

The report says that where there had been cases of bias, it had been detrimental to the consumer, with some products being unsuitable in terms of taxation, access and charges. CRA estimates the cost of commission bias to the consumer to be over £140m a year but it stresses this is likely to be a conservative estimate.

The report says bias is much worse in the IFA sector than among tied agents but concludes that overall it would not be fair to say the advice market is riddled with bias.

On regular-premium products, CRA found that there was no detectable commission bias. It suggests this may be due, in the case of pensions, to the PIA&#39s regulatory update 64 in March 1999, which said that personal pension recommendations must not materially disadvantage investors in terms of charges ahead of stakeholder.

The FSA polarisation paper says: “From the CRA research, there is evidence that commission does create both product and provider bias in some cases. There is also evidence that, in some cases, this leads to consumer detriment.

“Any detriment to consumers may, however, be mitigated by two possible factors – there may be rebating of commission, or in the long run, commission may work out cheaper for the consumer than paying an up-front fee.”


Autif and the ABI give cautious welcome to regulatory change

The Association of British Insurers and the Association of Unit Trust Investment Funds have cautiously welcomed the FSA&#39s proposed changes to regulation.The ABI says it has to look at the FSA&#39s plans in more detail to ensure they meet the objectives of giving people as much access to advice as possible, create a structure consumers […]

Marsden Building Society 10-year fixed

Marsden Building Society, fixed rate mortgageFixed term: 10 yearsFixed rate: 5.69%Minimum loan: £30,000Maximum loan: N/AIncome multiples: 3 +1 or 2.5 x jointArrangement fee: £295Redemption fee: 5,5,5,5,5,5, 4,3,2,1% of outstanding balanceConditions: noneIntroducer&#39s fee: Tel: 01282 440 500

Towry hit by exodus as two branches are closed

National IFA Towry Law faces a further exodus of senior staff as closes it Leicester and Edinburgh branches.In the last three weeks, four branch managers at the London, Bristol, Leicester and Cambridge offices have resigned. Two senior managers and two consultants in the Bracknell head office have also left.Towry&#39s discretionary fund management service has been […]

Govt interference means IFAs are now a dying breed

I have been in the financial services industry for 37 years, mostly as an employed IFA but since January 1996 as a partner in a provincial IFA in Kidderminster. I feel that I can no longer contain my anger and frustration as to how Governments of all political colours have interfered with our business over […]

‘How to…audit your auto-enrolment scheme compliance’

Avoid pension penalties with our auto-enrolment checklist

According to the Pensions Regulator’s annual commentary and analysis report released this month, 785 potential non-compliance cases were referred for investigation, with 23 auto-enrolment compliance notices issued. And they predict that the use of their statutory powers is only going to increase.


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