The lobbying has come from those providers with large legacy books of commission-based business who claim their customers may suffer if forced to close all legacy products to increments, claiming they do not have time to get RDR-compliant.
Mike Kellard, chief executive at Axa Wealth, strongly says: “The argument that we should delay a ban on legacy commission under RDR, as it may lead to customer detriment, needs examination. I would argue that the principles of removing commission bias have been at the heart of the RDR since it was launched in 2006 and that the FSA has been clear about the need for transparency ever since. Therefore, you could argue that providers and advisers have had long enough to adapt to a new model, which has no dependence on commission.
One of his big concerns is the longer the two processes run side-by-side the more confusing it is for customers and one of the main benefits of RDR will be negated.
“The potential for commission bias therefore may still exist if we don’t ban the practice,” he concludes.
“I believe therefore that the longer we continue with this optionality, the more detrimental it will be to customers, far more than any perceived impact of traditional providers being unable to take increments on legacy products.
“The fact remains that the sooner we move to a system free of commission, upfront, legacy or trail, the better the overall outcomes will be for consumers. The FSA should stick to its agreed RDR timetable.”
