Legacy commission rules to cost less than the £460m feared

Changes to commission on legacy assets will cost the industry less than the £460 million previously estimated, according to an analysis published by the Financial Services Authority (FSA).

Firms with large amounts of legacy business, such as insurers, feared that a total ban on commissions would force them to overhaul their entire legacy systems at great cost.

The FSA previously estimated additional compliance costs for the industry would reach £460 million.

But the regulator has now said firms can lower compliance costs by only amending systems for larger books of business and for the limited pool of products where top-ups are more likely.

The UK watchdog announced in today’s policy paper RDR Adviser Charging – treatment of legacy assets,  that only new money going into these products, known as topping up, will be subject to a ban.

Advisers can continue to receive trail commission on legacy assets sold before the December 2012 Retail Distribution Review (RDR) deadline.