SimplyBiz is to close its Capital Rewards scheme on the back of the FCA’s inducements rules, Money Marketing can reveal.
The programme, set up in 2007, comprised a separate business, Capital Rewards Ltd, into which participating providers made payments negotiated by SimplyBiz. Advisers were awarded shares in the Capital Rewards business, including an option to earn additional shares based on turnover targets. Advisers own 70 per cent of the business while the remaining 30 per cent is owned by SimplyBiz.
The scheme aimed to build a pool of money with a view to either selling the business or floating. Adviser shareholders remaining with SimplyBiz were entitled to a payout.
SimplyBiz is now to close Capital Rewards Ltd, stating that the RDR rules on inducements prevent the payments continuing on investment and protection business.
The decision to scrap the scheme will not affect commission payments to advisers.
SimplyBiz chairman Ken Davy says: “The Capital Rewards scheme was set up in 2007 when shares were gifted free of charge to those members who chose to receive them.
“The aim of the scheme was to generate additional payments from product providers without detriment to either clients’ or advisers’ benefits in exchange for marketing their products via the scheme.
“As a result of the impact of the RDR, we were forced to no longer accept payments from investment providers, which massively reduced the scheme’s potential.
“We continued to run the scheme for general insurance, protection and similar products until the inducements and conflicts of interest paper was released. As a result of this, we have had to close the scheme. It has a final end date of the end of December 2014 and we will make the distributions to qualifying shareholders by May 2015.”
Thomas and Thomas financial services managing director Darren Lloyd Thomas says: “Anything connected to the sale of products like this is a really bad thing.
“We had real concerns about Capital Rewards, which is why we never signed up. SimplyBiz is excellent at what it does but I think it is a good thing it is moving away from this scheme.”