Scottish Widows has dismissed the idea that providers will use the RDR as an excuse to stop paying advisers trail commission on existing products.
The FSA’s final rules on the treatment of legacy assets, published in February, confirmed that legacy commission payable on pre-RDR business where the product is changed will be banned but trail commission can continue in certain circumstances such as automatic increases to regular contributions and fund switches within a product.
At a Perspective Financial Group RDR roundtable last week, group operations director Peter Craddock noted the RDR deadline renders all business written up until 31 December as “legacy business”.
Craddock asked: “How are the traditional life providers going to react to this and is this an opportunity to cut out swathes of intermediaries? Is it going to be an excuse to claim all that lovely trail?”
But Scottish Widows head of distribution development Robert Kerr said each of its distribution channels were seen as separate.
Kerr said: “We give customers the choice of how they want to deal with us. The idea there is someone sitting with a white cat on their lap, controlling the market, would be a pretty daft business decision to make in reality. Why would you upset 90 per cent of your customers down a single channel, especially when there are treating customers fairly obligations to consider as well.”