Tenet backs APFA’s trail commission fears

Published on

tenet

Tenet has echoed The Association of Professional Financial Advisers’ concerns about the FCA’s stance on pre-RDR trail commission and the potentially damaging unintended consequences.

Minutes from the regulator’s June board meeting reveal that they fear the lack of an end date for legacy trail could “lead firms to act in ways that risked poor consumer outcomes.”

This prompted Tenet chief executive, Martin Greenwood, to warn: “There is no indication from providers that the discontinuance of trail will result in any benefit to the end consumer. Indeed, in the worst case scenario, it is possible that ending legacy trail could actually encourage churning.

“During the RDR consultation process, the FSA looked at the issue of trail commission on a number of occasions and acknowledged that in the absence of an explicit servicing agreement, trail commission represented deferred initial commission and that the act of abolishing trail commission would instantly devalue any advisory business on resale,” he continued.

“Significantly, many acquisitions over the last five years have concluded on a valuation based around the continuing income streams and to stop payments would result in some substantial – and in some cases perhaps even terminal – balance sheet write-downs.

“It would therefore be in the interests of the industry as a whole if this continuing uncertainty was brought to a close and for the current regulator to acknowledge the previous evaluations which concluded that legacy trail commission did not represent consumer detriment.

“In many instances, advisers taking less up front commission has resulted in a more sustainable business model for IFAs.”

COMMENT ON MORTGAGE SOUP

We want to hear from you!
Leave a comment and get the conversation started.
You need to register to post, so please login or sign up below.

Latest articles

Millions unclear on cost of credit as gaps in financial understanding persist

Millions of UK adults are using credit without fully understanding borrowing costs or how...

UK house price growth slows as London slips into decline

HM Land Registry’s latest UK House Price Index shows the average property price across...

FCA to extend conduct rules to cover bullying and harassment

Mortgage brokers, lenders and other regulated firms will have to tighten their internal conduct...

Solar and heat pump rules could push up mortgage prices

New rules forcing developers to install solar panels and low-carbon heating systems on most...

Keystone launches two-year tracker range as brokers seek flexibility in volatile market

Keystone Property Finance has launched a new range of two-year tracker products for brokers,...

Latest publication

Other news

Millions unclear on cost of credit as gaps in financial understanding persist

Millions of UK adults are using credit without fully understanding borrowing costs or how...

Supply side continues to drive the change agenda

Regulatory change is no longer something firms respond to periodically. It is now a...

Searching for sunny uplands

There is a growing sense, shared quietly in boardrooms and rather less quietly over...