Comission based sales to be banned

lostinrates

http://www.fool.co.uk/news/investing/2010/03/29/commission-based-sales-to-be-banned.aspx?source=ufwflwlnk0000001


seems quite a big change really. I dodn't read whole thing...to flibbertyjibbety to day to read a long thing. But dos it include mortgages? i'd b interested in opinions from people who have used this as part of their income, commission based sales of investment stuff...

ninky_2

great idea isn't it? although how long before an attempt is made to hide commission under another guise?

still, can't see it being anything other than a positive step (unless you are a financial advisor who has been relying on commission).

1984ReturnsForReal_2

ninky wrote: »

great idea isn't it? although how long before an attempt is made to hide commission under another guise?

"Monthly/Yearly bonus based on personal achievement"

StevieJ

It seems not much changing, there was a discussion in the other board.

Except they are not. Technically they are but its being paid using a similar method under a different name.

They are banning the providers from setting the remuneration. Instead the adviser will set the remuneration. That remuneration can be paid via the commission system.

So, lets say Cofunds pay 3% initial commission. Post 2012, the adviser can choose to be paid a 3% fee. So, nothing changed. However, the adviser could take 1% or 5% .

http://forums.moneysavingexpert.com/showthread.html?t=2364383

Pennywise

Commissions are actually quite a fair way of remunerating the IFA's. Yes, they may make a shed load of money from their bigger clients, but that subsidises the bottom end of the market. It's swings and roundabouts. If the IFAs didn't do so well out of the rich, they wouldn't be able to service the poor. I don't think the bottom end investors will be too impressed when the IFA wants 10% commission on their £20 per month pension. They need to be very careful here - if they get it wrong, IFAs will only service the wealthiest clients and the poorest ones won't be able to get IFAs to act for them.

(And, no, I'm not an IFA nor a commission based professional. I charge by the hour, so these changes won't affect me at all. I've just seen all the other foul ups made by the FSA in the name of "improvements")

kennyboy66_2

Pennywise wrote: »

Commissions are actually quite a fair way of remunerating the IFA's. Yes, they may make a shed load of money from their bigger clients, but that subsidises the bottom end of the market. It's swings and roundabouts. If the IFAs didn't do so well out of the rich, they wouldn't be able to service the poor. I don't think the bottom end investors will be too impressed when the IFA wants 10% commission on their £20 per month pension. They need to be very careful here - if they get it wrong, IFAs will only service the wealthiest clients and the poorest ones won't be able to get IFAs to act for them.

(And, no, I'm not an IFA nor a commission based professional. I charge by the hour, so these changes won't affect me at all. I've just seen all the other foul ups made by the FSA in the name of "improvements")

This is a myth that some financial advisors love to peddle. It makes it sound they are doing pro bono work for the poor.

Commission is the whole reason why people were once advised to leave company pension schemes in the 1980's, people were encouraged to take unsuitable endownments, get home income plans or a host of other scandals.

People paying £20 a month into a pension fund don't really need advice (the value of which in my experience has been poor) - they just need a low charge product from a big household name. It's not even the price of a daily newspaper.

The way forward should be some sort of compulsion to save attached to work, a bit like the Australian model.

Conrad

As a mortgage broker I earn more in fees than commision as I tend to accept complex cases where people really need a lot of help and would never resolve thier porblems using internet 'advice' and searches.

I would rather all people just paid a fee to be frank, but we all want something for 'apparantly' nothing.