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.”