The sunset clause marking the end of trail commission is a “huge challenge” for the industry to deal with, David Thomas, president of the Personal Finance Society has said.
Speaking at the Personal Finance Society’s annual conference in Birmingham, Mr Thomas said: “We are almost two years into the retail distribution review, and the challenge is not to say how much commission you are raising but how do you continue the levels of that income stream?”
In April 2013, the FCA issued a policy statement which said platforms must ensure all payments between fund managers and platforms must have stopped for new business from 6 April 2014.
However, a sunset clause allowed operators a further two years to phase out legacy rebates, meaning there are 18 months left before the end of trail commisson on investment products previously bought through platforms.
Mr Thomas also asked the 1,546 delegates to consider good practice and what it looks like in their businesses.
He added: “Another important area to consider is the guidance guarantee. Do you want to be involved, and if so, how?
“It is important for PFS to help you on this. My challenge is to share ideas, call me and let us share ideas with our membership.”
His comments followed those of Keith Richards, chief executive of the PFS, who said there was “strong proof” that advice was better post-RDR and that it is continuing to evolve.
Mr Richards told delegates: “Peers and MPs recommended advice in the Care Bill [now Care Act 2014], the government acknowledged the importance for retirement, the FCA is more balanced about the profession and the financial ombudsman service said the advised profession is an important service for the public.
“The Fos has already said that fewer than 1 per cent of complaints relates to financial advisers.”
Mr Richards said he was proud of the evolutional progress he had made in his two years at the helm, as he looked at what the organisation wanted to do over the coming year.
Other key developments mean that at the moment it is easier to borrow than save, but this could be about to change. With a shift post-April 2015 to a savings culture, he said the need for advice would grow.
He added: “The industry is portrayed as fragmented, so we want to bring all financial industries together to unite our objectives.”
Advisers have a key role to play, and a consumer confidence campaign to engage consumers would be really important.
He said the PFS laid the foundations of a consumer strategy. A consumer website has been launched, which has a directory of financial advisers, a chartered academy programme has been set up, providing a best practice hub, and an enhanced CPD and paraplanning programme have been created.
Delegate view
Aj Somal, financial planner for Birmingham-based Aurora Financial Planning, said: “There are great opportunities for us all. The industry needs a strong voice, lobbying for advisers and representing our concerns. The conference showed that the PFS is the largest organisation and is best placed for doing this. There should be more co-operation with other bodies, especially with regard to the PFS’s consumer confidence campaign.”
