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Last month, Norwich Union confirmed it would cut the commission rate across its Portfolio bond by 1 per cent, as current levels were "no longer sustainable".

Distribution director Angela Seymour-Jackson admitted the decision had been difficult, but said it was the right one for maintaining a balance between "providing a valuable proposition" and "the financial return available to the adviser and provider".

But Towry Law, which has long called for the abolition of commissions, said the current remuneration model of choice for most IFAs could give rise to a conflict of interest and, ultimately, inappropriate advice.

Andrew Fisher, chief executive at the private and corporate wealth adviser, said Norwich Union’s announcement was "further evidence the current system" - where most financial advisers are remunerated by product providers for selling their products - "is broken".

He said: "The Financial Services Authority, at the outset of the Retail Distribution Review, stated this system produces results that are 'unattractive to reputable providers, unattractive to their customers and whose benefits to intermediaries are questionable'. The announcement by Norwich Union is further evidence that this is the case."

Fisher said the only way to deliver independent wealth advice was on a fee basis - where no payment was made from the product provider to the adviser - and that he hoped the FSA would take further steps to address this in the November release of the RDR.