The UK’s largest adviser networks have ruled out shaking up their business models if the FCA allows commission to return.
Intrinsic and Tenet, as well as IFA support services group Simplybiz, have welcomed the prospect of commission being reintroduced as part of the Financial Advice Market Review.
Last week the Financial Conduct Authority’s acting chief executive Tracey McDermott said that allowing commission again was being considered as part of the FAMR, which is exploring ways of giving the mass market access to advice.
Gill Davidson, Tenet’s group regulatory director, said a return to commission could help address the advice gap for the mass market and encourage new talent into the advice sector. But she added that commission would not be attractive to Tenet’s target audience of advisers.
Many in the industry believed the Retail Distribution Review would kill off the traditional network because of the removal of commission for investment and retail products.
Last year Sesame decided to close its network for retail investment advisers in a move it has blamed on an RDR-inspired “natural migration” towards direct authorisation, which it stated challenged the “basic premise of the network model”.
Richard Freeman, chief distribution officer of Old Mutual Wealth, which owns Intrinsic, said the FAMR should consider the possibility that providers could cover the cost of advice under a ‘foundation tier’ of financial planning.
He clarified that this does not represent the re-introduction of commission, as returning to pre-RDR sales incentives and traditional commission structures “is not in the best interests of clients and advisers”.
Matt Timmins, joint managing director at Simplybiz, said the return of commission would have no impact at all on his company’s business model.
He said: “I couldn’t care less what the purists think, and I have no inclination to engage in debate with those who only charge hourly rates and only serve the wealthy. Their model is superb and I have no desire to disrupt that. We do, however, need a different remuneration model for the mass market and middle income groups who cannot afford, or don’t believe they can afford, our fees.”
