Commission
As part of the review the FCA will look at commission arrangements after “concerns” that the design of this may not allow firms to deliver good outcomes to policyholders.
But some FT Adviser readers said stopping commission could make less people take up protection.
One reader stated: "If commission is removed from protection sales and a fee has to be charged in line with investments, it will mean that very few people actually will buy any protection.
"IFA's will not want to give advice and carry the liability of that advice if there is no remuneration. I can't see clients paying £750 to purchase decreasing term assurance as most IFA's will have a minimum price point."
While another said commission helps to spread the cost of receiving advice.
They said: "Some will opt for the commission route, rather than paying a fixed fee from their own pocket, as it’s generally the most affordable option.
"Commission is effectively spreading the fee over the term of the contract which of course is reflected in the premium. I’m sure the majority have insufficient protection already and removing the commission route would make protection inaccessible and unaffordable to many."
Another added: "Protection is sold and rarely bought. This is clearly evidenced by the massive shortfall with current Uk mortgage holders.
"If commission is eventually removed, expect the protection shortfall gap to increase significantly."
tom.dunstan@ft.com
What's your view?
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