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Skandia says method of remuneration ‘irrelevent’

The independence of an adviser is not affected by commission as the method of adviser remuneration is irrelevant if the quality of advice is good enough, according to Skandia.

Head of marketing Billy Mackay says the FSA’s RDR review has got the issues back to front.

Mackay says: “What is important is the quality of service and advice provided by financial advisers to their clients. Discussing the appropriateness of different models of remuneration for advice, and particularly commission, is looking at the issue from the wrong end. As long as the client appreciates the value of the advice and understands the level of remuneration and impact on their policy there is integrity in the model.”

Recent research by Scandia shows 90 per cent of advisers believe a choice of remuneration options, including fee deduction agreements, is already helping advisers evolve their business model and 84 per cent say regulation is not required to facilitate this evolution.

Skandia also claims that 69 per cent of advisers that are remunerated by some form of commission are opting for a fee deduction agreement, rather than traditional commission.

Mackay says: “The most important issue is that advice is available to those that want it and it is up to the client and adviser to agree the most suitable method of payment for their circumstances. Whether this is a fee or commission is irrelevant and certainly does not have any impact on the independence of the adviser.”


Let it be

At its annual conference last week, the Chartered Institute of Housing claimed that tax relief on buy-to-let mortgages is contributing to the problems faced by first-time buyers and called on the Government to close what it called the loophole that allows BTL landlords to offset the costs of running a rental property, such as service charges, repairs and letting agent fees, as well as mortgage interest. This is also a common theme in letters to the press from frustrated would-be first-time buyers.

Eclectica adds agriculture to its stable

Eclectica Asset Management has established the CF Eclectica Agricultural fund, an Oeic that aims for growth by investing in a global portfolio of companies that are involved in or related to agriculture and farming.

Window on the world

UK income funds generally outperform UK all company funds. Over the past 10 years, for example, the average UK income unit trust has gone up by 145 per cent against 105 per cent for the average UK all companies fund. However, UK income funds now have very little choice of where to invest because of […]


E&Y’s Crawford flags winners from RDR paper

The RDR seems to have been scripted to benefit the banks, says Ernst & Young Insurance lead partner Shaun Crawford. He says it will also make winners of truly independent, whole-of-market, fee-based IFAs and estimates only around 25 per cent of IFAs currently practicing will make the grade of professional financial adviser. Crawford says: “There […]


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