With effect from 1st January
2013 IFA’s (Independent Financial Advisers) will no longer be able
to draw commissions from customers. These new rules are being
introduced under the Retail Distribution Review (RDR). Instead,
IFA’s will only be able to charge on a fee basis – very much like
an accountant or solicitor. Under the commission basis payments are
made (which can be worth thousands of pounds) on the sale of various
life insurance, pension or other investment policies.
This change is likely to have a
significant impact on an industry already under pressure from changes
in recent years. There are presently close to 50,000 people selling
investment products in the UK which includes those employed by the
banks and building societies. Around half of these operate as IFA’s,
often as sole traders.
It is likely that for many of the
smaller IFA businesses this will result in a sale or retirement and
there will be fewer IFA’s in future. Inevitably this will result in
the larger organisations surviving as smaller firms are taken over or
go out of business.
Tim Corfield commented “Whether
intended or not, this will leave much of the industry in the control
of the banks and building societies and fewer people will receive
financial advice in future”.
Tim Corfield - August 2012
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