Another key concern for industry participants is that the current caveat on the FSA’s ban of kickbacks could encourage some advisers to push clients towards DFMs for the wrong reasons.
“To a degree, the temptation will be there to continue to channel clients into the DFM route even it remains no longer suitable. Though I would like to think that this kind of scenario would be infrequent and that the adviser would embrace the spirit of the RDR,” says Mr Willis.
Conversely, some IFAs argue that the potential ban on kickbacks changes bears little significance for them and they have seen little evidence of industry participants abusing current loopholes.
“In our peer group I do not get the impression that anyone is particularly concerned by this. It seems entirely consistent with the outcomes that the FSA wants to achieve and their stated intentions for many years,” says Gavin Jones, chartered financial planner at the Old Mill Group.
As the results of the FSA’s next consultation draw closer, advisers will need to prepare for the increasingly likely prospect of a full ban on referral payments including legacy payments.
Katie Holliday is a freelance journalist
Adviser view
Gill Cardy, managing director at IFA Centre:
“It has been clear that pretty much everyone agreed that the payments should be treated exactly like other adviser payments under the RDR rules on adviser charging and legacy payments.
“The FSA will, I am sure, act if they see activities which act against the spirit of the RDR.”
“Potential loss of earnings will be an issue for the adviser community as a result of this issue”
