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Adviser calls for return of commission for low-value clients

Commission should be reinstated on products for low-value clients to ensure they are not left without advice, according to one financial adviser.

Sheriar Bradbury, managing director of London-based Bradbury Hamilton, told Money Management that such a move would address the growing advice gap.

“The only way to deal with this advice gap now is to incentivise people to sell it to people,” he said.

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“For the bottom end of the spectrum, they should maybe think about reintroducing commission.”

For the average man in the street, Mr Bradbury said, financial products are unlikely to be recommended unless there is an incentive for somebody to sell them.

It would be critical that greater controls were placed on the levels of commission than in the 1980s, Mr Bradbury added, if such a system was brought in.

“You would need to keep a control on what could be taken,” he said. “The problem is if advisers are allowed to get different levels of commission from different places, it can lead to product bias.”

Returning to commission in a structured way would allow more people access to advice, Mr Bradbury added, saying that all bias must be removed for it to work.

“I think there would need to be some kind of controlled reintroduction of commissions and a level playing field created where there are maximum costs that could be taken out of the contracts,” he said.

Mr Bradbury said that the government, rather than the regulator, is likely to look at the impact of the advice gap, particularly since a conservative government advocates individuals looking after themselves. Pensions are a particular issue, he said.

“The problem that is going to happen is we will have a large section of society that hasn’t made the provision necessary and that provision will have to be borne by the state.”