CompaniesOct 30 2012

M&G: We will not facilitate charges and others will follow

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Investment house M&G has told FTAdviser it will not be facilitating adviser charging as allowed under the RDR rules, instead leaving advisers to arrange their remuneration through a platform or direct with clients.

Confirming that the company will not facilitate adviser charging post-Retail Distribution Review, a spokesperson for M&G said several other investment houses will follow, indicating that the move away from facilitation could become a wider trend in the industry.

For advisers currently paid largely through commission, the announcement is likely to stoke concerns that clients may balk at charges when they have be agreed and paid separately.

However, recent warnings from the regulator may be prompting provider fears over the potential for charging facilitation to bring future problems.

Last week FTAdviser reported that Standard Life had sent a letter to advisers warning of risks to existing trail revenue due to adviser charging rules and recommending advisers get signed agreements for all legacy income.

Standard Life wrote to advisers after they in turn received a letter from the Financial Services Authority warning that where a firm opts to facilitate adviser charging there is a requirement to obtain and validate that client instruction. Consent for this would have to come from the retail client rather than from the adviser.