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.”