RDR = "bigger slice of pie" for providers?

SallyG

http://www.moneymarketing.co.uk/adviser-news/carl-lamb-providers-are-making-advice-more-expensive-post-rdr/1069043.article

"Cases are happening where the client is still paying the same to the provider, which would have included the adviser’s commission before RDR, without passing anything on to the adviser and then paying the adviser separately for the advice. Treating customers fairly? I do not think so."

Please can anyone explain simply how this situation happens.... is it about direct sales?

GhIFA

No, it's not about direct sales.

The providers would charge an annual management charge for the client's plan - for example 1%pa, of this, prior to RDR, 0.5% could have gone to the IFA as "trail commission".

The thrust of that column is that some providers have "switched off" the trail commission, but retained the full 1% charge, therefore pocketing the additional 0.5% themselves, whilst the client has to pay a further 0.5% to the adviser for their ongoing advice fees.

To be honest, it's not something I have encountered so far, but I could believe it may well happen with some providers (particularly some of the "closed book" companies).