Trail Commission Ban Would Close Half Advisers
Published / Last Updated on 03/12/2013
Trail Commission Ban Would Close Half Advisers.
A survey of 433 financial advisers by Panacea and GFK has found that around half of financial advisers would be forced to close if there was a ban on hidden trail commissions set up before new rules on financial adviser charging started on 1 January 2013.
The Retail Distribution Review (RDR) started in January with financial advisers both independent and bank advisers being required to have higher level qualifications and charge agreed, transparent fees to their clients for financial advice and arranging financial products.
Many financial advisers have already been forced to leave the industry and many banks have closed their financial advice arms.
The new research, follows speculation that the financial regulator, the Financial Conduct Authority (FCA) will ban all hidden commissions, usually a % of the premium or the value of the pension or investment funds, such as renewal commissions and trail commissions could be banned for arrangements set up before January 2013. The above survey responded with nearly half of financial advisers, 46%, suggesting that any move such as this would mean major financial cash flow problems for firms and force financial advisers to close.
Comment
Clear, fair and not mis-leading is what is required by the financial regulator. If any financial firm has set up hidden trail commissions, then they should come clean and agree the same charge with their client, not sit tight and let the cash roll in.
As many of you know, we have long campaigned to have trail commission banned. The hidden charges hurt investment returns on an ongoing, compounded way, quite dramatically. We have always charged set fees for ongoing advice as part of our Money MOT service, and will try and stop any hidden trail commissions set up by previous advisers if you use us as your financial adviser.
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