Network chiefs slam providers for ‘trousering’ trail

Neil Stevens, joint managing director of SimplyBiz, and Jon Dear, marketing and proposition director of Sesame Bankhall Group, called on providers to “honour” their commitment by pledging to keep trail switched on for ongoing non-advised transactions.

Speaking after a web masterclass on RDR held by Prudential this week, Mr Stevens said: “Providers should sign up to a pledge that they will pay trail, as long as it is permitted by the FCA, instead of ‘trousering’ this money.

“If life firms are going to stop giving it to advisers because of transparency concerns, they should give it back to the customer instead.”

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Mr Dear said that trail commission had been the “backbone” of many advisory businesses.

He added: “The stance that certain providers are taking is creating uncertainty at a grass-roots level in the adviser world. That is undermining the viability of the market, and it is a huge worry for many firms that should be cleared up as soon as possible.”

Russell Warwick, distribution director for Prudential, said the company would continue to pay trail commission as the regulations remain “clear” about the suitability of this option on packaged products.

Research by Avelo last month found that 53 per cent of an adviser’s income was still based on trail.

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“What concerns me are the number of firms whose models are essentially commission by another name; whether the income is contingent on the product recommendation proceeding and the availability of payment via provider.”