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

LSL Financial Services appoints interim managing director

LSL Financial Services has appointed Piotr Nowosad as interim managing director to lead its...

Mortgage demand slows in second quarter as higher rates hit affordability

Higher borrowing costs weighed on mortgage demand during the second quarter, although Stonebridge says...

Omni Protect becomes first service provider to adopt Beagle Street intermediary proposition

Omni Protect has become the first service provider for directly authorised firms to offer...

Dudley BS rolls out new mortgage platform to all brokers

Dudley Building Society has completed the rollout of its new mortgage origination platform to...

The Cumberland commits to branch network as high street banks continue to retreat

The Cumberland Building Society has pledged to maintain its branch network across the North...

Latest publication

Other news

LSL Financial Services appoints interim managing director

LSL Financial Services has appointed Piotr Nowosad as interim managing director to lead its...

Mortgage demand slows in second quarter as higher rates hit affordability

Higher borrowing costs weighed on mortgage demand during the second quarter, although Stonebridge says...

Omni Protect becomes first service provider to adopt Beagle Street intermediary proposition

Omni Protect has become the first service provider for directly authorised firms to offer...