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FCA weighs return of financial advice commission payments

Financial Conduct Authority says commission payments to financial advisers could return on some products, three years after they were banned.

FCA weighs return of financial advice commission payments

The Financial Conduct Authority (FCA) has said it could reverse a ban on commission payments for financial advice on some products as it undertakes a new review of the sector.

Acting FCA chief executive Tracey McDermott told BBC Radio 4's Money Box programme she could not rule out a return to commission on some products as part of the regulator's financial advice market review.

But she said the new review would 'not reverse the retail distribution review', the overhaul to financial advice rules implemented in 2013 which banned commission payments from financial product providers to financial advisers.

'We do not want to go back to a world where we had the problems of the pre-retail distribution review,' she said. 'What we do want to look at is actually what is the best way of delivering advice and guidance across the market so I wouldn't rule out that there may be some element of commission, but we are not going to reverse the retail distribution review,' she said.

The regulator's softening of its stance on commission payments comes as high street banks plot their return to financial advice. Santander last week outlined plans to rebuild an investment advice arm with 225 advisers.

McDermott also denied the regulator had gone soft on the banks, after a review into banking culture was dropped and the scrapping of an inquiry into allegations HSBC's Swiss private bank helped wealthy clients evade tax.

'Nothing could be further from the truth. We are not going soft on banks,' she said.

3 comments so far. Why not have your say?

robert marshall

Jan 11, 2016 at 16:33

Given the disbelief of Ms McDermott's assurances on going soft on the banks the possible change of stance on commissions begs the question what is the FCA doing and if it continues to unravel what it insisted was necessary then why is everyone paying for it.

She may not be long term but she has left her replacement with a night mare scenario of what to believe when the FCA says anything in the future

Given there is no let up of Euro regulation, and there is a clear scaling back on FCA gold plating. Should we not be expecting a continuation of the unravelling so we end up with a set of rules that is a maximum 25% of what we presently suffer.

The FCA was seen as a joke internationally except by those who had to empathise officially but now it is had turned into a farce and every firm and member of the public having used regulated firms in the past years has paid for the lack of coherence, logic and now inappropriate regulations.

To even suggest no pressure was imposed as McDermott seems to suggest is either being incredibly economic with the truth or just plain incredulous

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Hampshire cynic.

Jan 11, 2016 at 19:15

I believe the revised rules on commission are working pretty well. The problem is that so called wealth managers and financial advisers are getting away with charging far too much for their sometimes questionable advice.

That should be controlled/regulated ASAP.

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Jan 11, 2016 at 21:18

The need for advice is largely due to the complexity of the tax law, a particular case being pensions taxation. The FCA would be better to employ its resources lobbying for simpler legislation that would minimise the need for expensive advice. The RDR rules as they stand seem to be working reasonably well and it is much too soon to start reversing them. Fudging the issue of excessive and hidden charges by allowing commission payments, is not the answer.

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