View more on these topics

Warning is repeated about building up trail cushion

Advisers have received a new warning from the regulator not to churn clients into new products to maximise recurring revenue in the run-up to the RDR.

In its retail conduct risk outlook published this week, the FSA says advice firms may look to increase the amount of trail commission on their books as a way of “cushioning” the RDR’s ban on commission.

It says advisers selling their businesses may try to build up income by selling significant amounts of commission-based products to make their firms more attractive to buyers.

The FSA says providers may also seek to acquire market share by offering big commission to advisers.

The FSA says: “We have heightened our supervisory vigilance in this area and will continue to intervene where we believe high commission levels may be contributing to poor outcomes for consumers.”

Clancy Financial Planning financial planner Jim Clancy says: “I am getting fed up with this kind of thing. The FSA makes us all look like crooks. The vast majority of advisers I know work with honesty and integrity.”

Recommended

Rock offering 90% LTVs for first-timers

State-backed bank Northern Rock has launched a range of 90 per cent loan-to-value mortgages aimed at first-time buyers. The range includes a two-year fixed rate mortgage at 5.99 per cent, a three-year fixed rate at 6.49 per cent and a five-year fixed rate at 6.59 per cent. There are no product fees for any of […]

Coal position

Flooding and a cyclone in Australia have hit coal supplies and analysts could upgrade their forecasts for commodities

1

A half point rate rise could prove to be the tipping point

As the monetary policy committee argued their very different views on interest rate changes, many in the mortgage industry pondered secretly, some publicly, that quite frankly an early rate rise will be good for business. After all, nothing is better than panicking people into action than a short, sharp shock. But it might not be […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. No worries about the banks buidling up high levels of trail commission.

    That aside, it’d be interesting to see the evidence on which the FSA is basing this warning. Is churning for no better reason than to build trail a widespread practice in the IFA community? And on just what types of products are switch recommendations typically based? It may well be that many clients are quite willing to accept the deduction of a reasonable level of trail commission to fund regular reviews that they’ve never received in the past.

    There’s probably a good deal more to this than meets the eye.

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