IFA commission

thegolfnut

I have paid over £6k in adviser commission on a pension fund that I manage myself. Can I recover any of the £6k?

Your_Hero

Far too vague to know. I would say unlikely but it does depend.

How did you arrive at that £6,000+ figure? Many users on this forum tend to incorrectly bundle all charges into a single amount (including platform charges, fund manager fees, adviser fees etc.) and assume this is all going to the adviser, which it usually isn't.

When was the plan set up? Is the pension plan currently in drawdown?

The old commission regime is quite different to adviser fees in today's world. Fees pay for a service and the advice, specified and agreed at outset. Commission is just commission and tends not to be any agreement of ongoing work/service but it does depend on your relationship with the IFA.

Does your IFA provide you with any service?

dunstonh

Commission is paid by the provider. Not paid by you. You pay the annual management charges and that factors in the commission. However, the amounts do not always go hand in hand. e.g. the adviser could be receiving 0.5% p.a. but the charge being 1.0%. Or the adviser may have got 5% up front but you still paid 1%. Or if you went direct (without advice) you would still have got 1% despite no adviser (the provider keeping the commission).

Commission could either be paid up front, annually or a combination of the two. For pre 2013 sales, there was no problem with the method used and the only requirement was for it to be disclosed. It did not have to be for provision of future services. Although some would use it for that purpose.

There have been some complaints published by the ombudsman but the common theme is that where you have an agreement that says there will be ongoing servicing and the adviser refuses to give ongoing servicing, then the ombudsman rules in favour of the consumer. However, where there is no agreement about ongoing servicing then they get rejected (as nothing exists links remuneration to service). Importantly, the FOS cases that were successful were because of refusal to provide service upon request. Not proactive. i.e. the person went to the firm to ask for ongoing advice and was declined. Had the firm given the advice, it would not have been successful (that is how the complaint outcomes read).

Post 2013 sales require any ongoing remuneration to be linked to the provision on ongoing services. Pre 2013 dont fall under the post 2013 rules until a piece of advice brings the pre 2013 into the post 2013 regime.