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Consultancy develops commission disturbance matrix

Finance and Technology Research Centre has added a ‘commission disturbance’ matrix to its free adviser quality analyser tool, which details 15 events that will trigger commission changes.

The specialist consultancy stated the addition was driven by feedback from advisers at its investment forums, where it became clear that different product providers have different rules and criteria around the disturbance events that would trigger trail commission on pre-RDR plans to be switched off.

With no standard approach in the industry, F&TRC has produced a matrix that includes most providers and details 15 events that will trigger commission changes. It will take in pensions, collective investments, onshore and offshore bonds, and unit linked life insurance.

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Ian McKenna, managing director at the firm, said: “Whilst in many instances, the information may be available somewhere on provider and platform websites, the navigation of such sites and the location of this information will vary from company to company.

“This can be a major headache for adviser, not to mention a considerable administrative time drain.”

Chris Jones, head of financial planning at Intrinsic Financial Services, commented: “It’s a great free tool that will reduce the administration burden on advisers and enable them to have clear and timely conversations with their clients.”

However, advisers that FTAdviser spoke to were not so sure.

Daren O’Brien, director at Aurora Financial Solutions, stated that they would not use the tool as almost all clients are on fee agreements.

“If we do any business with an old insurer then we do expect the commission to be switched off anyway/already. Our firm is only four years old so we don’t have as many legacy issues, some of the older firms may still be reliant on commission from their legacy business.”

Jonothan McColgan, director and chartered financial planner at Combined Financial Strategies, agreed that as his practice is only six years old most my clients will not be hit by the 2016 changes.

“Also you need to remember that 2016 only really applies to platforms/fund supermarkets. Any trail direct from fund providers, life companies on investment bonds and pensions are not technically affected. However, I am sure that it will not stop the life companies making a grab for the trail.”

peter.walker@ft.com