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Return of MCA would be welcomed

The return of the maximum commission agreement would be seen as a welcome step by nearly half of IFAs, according to Money Marketing and Virgin One&#39s State of the IFA Nation poll.

The Office of Fair Trading decided in 1988 that the maximum commission agreement was “significantly anti-competitive” but the Sandler review has asked if there is a case for regulatory intervention in setting commission levels, which is a move welcomed by many IFAs.

Forty-six per cent of the 280 IFAs responding to the survey said the maximum commission agreement would be of benefit to the industry.

It also found that only 9 per cent of IFAs work totally on a fee or commission-rebate basis, suggesting that the FSA&#39s depolarisation proposals for IFAs to operate on a defined-payment basis will affect the vast majority of firms in the IFA sector.

IFAs do agree with the some of the findings in the FSA&#39s research beh-ind the depolarisation proposals and with some of Sandler&#39s criticisms of the industry.

Sixty five per cent said commission occasionally leads to biased product selection and 43 per cent believe commission terms had shored up the market for with-profits bonds.

Scottish Life head of communications Alasdair Buchanan says: “A lot of IFAs are coming to the conclusion that there has been commission excess in a small number of products which has given the industry a bad name.

“But the FSA is running the risk of damaging the whole industry just to tidy up a few areas.”

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