Chief executive Andrew Fisher, who has been outspoken in his criticism of commission-based advisers, says he has no idea who the clients are, but argues that it is right for Towry Law to continue taking the payments until the contracts expire.
He says: “These are clients who bought products from Towry Law up to 25 years ago before we owned them. I have no idea who they are but it is perfectly acceptable for someone who buys a business that has historical agreements in place to honour that. It is not acceptable to work that way on new business, but the trail commission is part of the value of the business being bought.”
Fisher points out that the RDR allows firms to continue to take trail commission on legacy business.
He says: “It is not physically possible to trace back who these clients are and in practical terms it is not possible to turn the commission off. We will continue to take the commission until the contracts run out.”
Towry Law has seen a pre-tax loss of £10.6m for the year ending December 31, 2008, plummeting from a profit of £812,000 in 2007. Fisher said the fall in pre-tax profits is due to significant investment in the company’s infrastructure. Revenue for 2008 stayed level at £49.1m.
In October Towry bought the UK subsidiary of the US adviser and investment firm Edward Jones for just £1.
Edward Jones, which has 400 financial advisers and 50,000 clients with £1.5bn of client assets, made a loss of £35m last year.