In its response to the RDR, managing director Joseph Ujobai says the SEI supports a separation of the product and advisory fees but argues an outright ban on commission is not the best way to stamp out bias.
He says: “We suggest that what may be needed are limits on the commission payments rather than outlawing them per se. Or alternatively, consideration should be given to ways in which consumers may best be able to decide payment structure.”
Ujobai adds: “We believe that the separation and transparency of adviser and product fee and hence removal or undue influence of product provider should not necessarily be focused on pricing schedules but should instead be focused on other evidence and practice of a firm’s delivery of unbiased advice.
“Whilst we agree to the removal of product/trail commission fees, we believe they should be removed only where they unduly influence the adviser from acting or offering advice in their client’s best interest. This is because a complete ban of such fees may be counter-productive given some of the benefits to the consumer in paying trail commission fees to their adviser.”