IMA cool on trail commission clarification
The Investment Management Association (IMA) has given a mixed reception to recent clarification on trail commission by the Financial Services Authority (FSA).
The FSA published guidance on when trail commission can be paid, ending some uncertainty.
Julie Patterson, director of authorised funds and tax at the IMA, says: “We welcome the clarity provided by the new guidance for some common scenarios.
“These include top-ups to existing investment when new advice is given, and automatic changes to investments due to a portfolio rebalancing or investment increases agreed before the end of 2012.”
However, Patterson says the trade body was “very disappointed” new guidance on life products could lead to “distortions in the markeptlace”.
She adds: “It is also disappointing that the FSA has decided not to include in the guidance explicit recognition that product providers and platforms can only act on the basis of instructions from advisers.
“We note that the FSA has decided not to introduce at this stage a sunset provision, whereby all trail commission would cease, after, say, five years.
“However, we welcome the commitment to monitor developments in the marketplace to act if trail commission levels do not reduce.”
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