Witan Investment Services has notified advisers it will cease paying trail and initial commission for all business written prior to the RDR.
In a letter sent to advisers this week, seen by Money Marketing, WIS managing director Graham Hunnisett says the firm is making changes to the Witan Wisdom terms and conditions, which affect Isas and share plan accounts.
The letter says: “With effect from 31 December 2012, WIS will stop the payment of all trail and initial commission to financial advisers. This includes the payment of trail commission on business placed before 31 December 2012.”
Hunnisett says where a client was previously charged 1.25 per cent plus VAT for the Witan Wisdom Isa, the charge will reduce to 0.75 per cent plus VAT with effect from 31 December.
He adds any commission owed to advisers for the period up to 31 December will be paid in the first quarter of 2013.
Hunnisett says Witan has written to clients to inform them of the change.
A spokesman says the move will affect around 150 advisers and the trail being switched off amounts to “a few thousand pounds a year”.
Speaking to Money Marketing, Hunnisett says: “We very much welcome the RDR’s new level playing field which, by removing product-provider incentives, ensures that open-ended funds and investment companies are able to compete for investors’, and their advisers’, attention on their own merits.
“We have a small number of ISA accounts set up under the old rules which allowed payments to intermediaries, which will no longer pay such commission after January 2013, in order that all accounts are set up on the same basis in the future.”