Commission Squeeze Closes More Bank Advisers

Commission Squeeze Closes More Bank Advisers.

Clydesdale and Yorkshire Banks have become the latest in a long line of banks to close their financial advice arms.

This comes hot on the tail after ‘super tanker’ insurance group Axa who have closed their financial advice links with banking groups such as the West Bromwich Building Society as well as Clydesdale and Yorkshire.

Why is this?

On 1^st January 2013, the Retail Distribution Review (RDR) rules started where all financial advice services must be quoted on a fee basis.

This means that financial advice is much more transparent, and whilst the financial adviser’s fee can still be taken from the policy charges (commission in all but name), it must be set out and agreed with you and published before any works are done.

This means that the gravy train for most of the UK’s large banking groups has now stopped.

Our view

We compared financial advice fees in another article and found that advice fees for banking groups were just too expensive for restricted, one company only advice, versus our independent whole of market advice.

What is happening to the banks?

Many banks are switching to non-advised selling.  What is that? It means that they can still take full commission on a non-advised basis.  It also means that you have no financial ombudsman rights protection for negligent advice as you will not have received advice but still have paid as much if not more for the privilege.  You have been warned: Be careful how you access financial advice and the products that you subsequently buy.