Aifa director general Paul Smee is warning the industry that failure to embrace the spirit of the menu could see commission-based advice slipping away.
Smee says if the industry does not use the opportunity of the menu to make commission more transparent then he believes the regulator will come back with more ideas beyond the control of the industry.
He points out that the regulator has always been suspicious of commission and says the menu offers a means of giving commission added transparency to ease any suspicion.
But if firms get carried away over the complexity of working out figures or try to find ways of making the figures less transparent, then this could cause the FSA to come back with plans for dealing with commission, thinking that the menu has not worked.
He says CP121, the predecessor of the menu which put forth the defined-payment system which would have effectively made all IFAs charge fees, showed the industry that the FSA's attempts at transparency can cause the market problems.
Smee says: “I would say that commission is drinking in the last chance saloon. IFAs really should embrace the spirit of the menu as they have nothing to fear from transparency. They should have confidence in what they do.”
Timothy James & Partners director Robert Guy says: “The effort that would have to be put into finding ways not to disclose commission would be better used to enhance business and obtain new clients. We will be embracing the menu and suggest everyone else does too.”