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

Foundation cuts buy-to-let rates and relaxes holiday-let occupancy rules

Foundation has reduced rates on selected buy-to-let mortgages by up to 0.10 percentage points...

FintechOS: Firms have two years to embrace AI or get left behind

Financial services firms have no more than two years to embed artificial intelligence into...

Financial services must move beyond AI experimentation to deliver real returns

Financial services firms risk wasting substantial investment in artificial intelligence unless they fundamentally rethink...

RAW Capital Partners sets new lending record as product range expands

RAW Capital Partners has reported record annual lending volumes for 2026, surpassing its total...

Molo first lender to adopt Rightmove valuation technology through OMS

Molo has become the first lender to use a new integration between One Mortgage...

Latest publication

Other news

Foundation cuts buy-to-let rates and relaxes holiday-let occupancy rules

Foundation has reduced rates on selected buy-to-let mortgages by up to 0.10 percentage points...

FintechOS: Firms have two years to embrace AI or get left behind

Financial services firms have no more than two years to embed artificial intelligence into...

Taking the anxiety out of finance

It’s an anxious time for mortgage borrowers. A recent study by Handelsbanken Wealth found...