View more on these topics

The £30m problem: E&Y reveals advice sector’s reliance on provider payments

Industry experts say up to 50 per cent of these payments could be affected by the FCA’s clampdown on inducements.

The advice sector will receive more than £30m in payments from providers during 2013, according to Ernst & Young. 

Last week, the FCA revealed two firms had been referred to its enforcement division following a thematic review of distribution deals agreed by 26 advice firms and insurers. Partnership has confirmed it is under investigation.

The regulator has published guidelines restricting the circumstances when advice firms and support services providers can make a profit from payments for events such as training, seminars and conferences.

Ernst & Young financial services division director Malcolm Kerr says: “The FCA review clearly found cause for concern and identified payments which seem to breach conflict of interest or inducements rules.

“We estimate the total value of all payments for all services will be in excess of £30m for 2013.”

Industry experts say up to 50 per cent of these payments could be affected by the FCA’s clampdown.

In this week’s Money Marketing, Threesixty managing director Phil Young warns the FCA’s clampdown on inducements will have a bigger impact on the advice sector than the RDR.

He says: “I would say comfortably half of the payments from providers to advice firms will be affected by this, possibly more. A lot of providers have been looking for an excuse to stop these payments anyway.

“I think providers will in future not pay for anything but attending and speaking at events. The idea of a marketing package that is agreed on an annual basis will be a thing of the past.”

Tenet distribution and development director Helen Turner says: “Tenet was one of the 26 firms in the FCA review and we were not required to make any changes to our adviser development programme.

“That being said, we are seeing an increasing number of requests from providers to disclose more information regarding the cost breakdown of our programme, which we are happy to do. 

“Alongside this, we are also being asked to sign agreements which they provide, rather than an agreement we have created.”

Informed Choice managing director Martin Bamford says: “If the FCA’s stance results in a significant loss of revenue then we will see some firms, particularly loss-making networks, struggle to survive financially.”

In Partnership, Intrinsic, Lighthouse, Openwork and Sesame were unavailable for comment.

Recommended

2

‘Watch this space’: Labour signals further pensions tax relief reforms

Shadow pensions minister Gregg McClymont has signalled Labour will propose reforms of pensions tax relief before the next general election. Speaking at the Labour party conference in Brighton today, McClymont said the debate on the future of pensions tax relief will continue and to “watch this space” for Labour’s proposals. Earlier this year, the Pensions […]

Chris-Hannant-2012-700x450.jpg
1

Apfa pushes FCA for regulatory dividend for advisers

Apfa has called on the FCA to introduce a regulatory dividend for advisers.  The trade body has written to FCA chief executive Martin Wheatley outlining a series of steps the regulator should take to improve the business environment for advisers. Apfa argues given the increased professionalism under the RDR advisers require less supervision and should […]

8

Peter Hamilton: A call to arms against the scourge of claims firms

Here is a call to arms! Let us all do something about the scourge of claims management companies in the field of financial services. A number of Members of Parliament are interested in getting something done. So at least let us contact our MPs and say what our experience with CMCs has been, and what […]

State of the markets: global growth

In conversation with journalist Alexis Xydias, Artemis Global Growth Fund manager Peter Saacke discusses the state of global markets and how he is positioning his fund. Peter gives his views on the growth potential of US, Europe and emerging markets, each of which is on a different stage of the road to recovery. And with a […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Wake up and smell the coffee – this has been going on for far too long. Non profit making businesses have been funded by Product Providers in an attempt to control distribution. Hopefully this is the time for the smaller regional IFAs to be really successful.

  2. At the risk of being naive surely if this is going to affect Networks big time and they become unsustainable models it will put thousands more of advisers out of business. Why is the FCA so fixated with this? Do they really think that advisers who have been in th ebusiness for many many years are going to send business to a provider if it is not suitable for the client? This would risk our own business all for sending a case or two or 3 to a provider who gives our network some financial assistance. Are they really so stupid to think this? The providers all have marketing budgets and if they chose to spend these on paying networks for the cost of seminars and conferences then that is a good thing as we are all able to beneift from CPD from these events. My own network insist we all make a contribution towards the annual conference if we wish to attend and this is fine.
    Still if this is as much as the FCA have to worry themselevs over then we are obviously doing most of the other things right. That is until, of course they take the next step and ban product facilitated AC payments. Mark my words this will be th enext “Big thing” within RDR 2 or possibly RDR 3.

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com