The Financial Services Authority has confirmed its proposed ban on legacy commission in a widely-expected move.
Legacy commission refers to new commission due to an adviser as a result of a change to a contract set up pre-RDR, but which occurred post-RDR.
In a consultation issued today, the regulator confirmed its stance: "We consider it would be undesirable in principle for legacy commission to be paid to advisers after the RDR rules come into force, given that an important aim of the RDR is to move away from a situation where commission can lead the adviser's interests to be aligned with the provider, rather than the customer".
Today's proposals come after the FSA issued guidance to trade bodies in March setting out its intention to ban legacy commission. But the proposal triggered a backlash from life providers, which argued the move would be detrimental to consumers. The Association of British Insurers lobbied for the ban to be postponed.
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