FCA commission ban would be 'disastrous' but could happen - Tenet

Geoffrey Clarkson, executive director of the Tenet group, and panellist at Marketforce's Future of Protection event yesterday, said a commission ban would undermine products and demolish adviser business models that sell therm.

He said: "It would be a complete disaster if the FCA was to take the commission ban forward and it could very well do that."

Second of three panellists at the session entitled Evaluating the changing role of advice in protection, Lee Schopp, finance director at British Friendly Society, echoed the view that a commission ban would be "disastrous".

"Nobody will pay fees to visit an adviser for protection. It will move people away from advisers and probably the people that most need protection who will last the least time financially if they could not work," he said.

"It would mean people not really knowing what they are buying and comparing on price alone and that would be very bad."

Third panellist Alan Lakey, partner principal of advice firm Highclere Financial Services, said commission rewarded advisers for finding customers in the first place not for putting business on the books.

He said: "Removing commission would be catastrophic. There has to be some financial reward for advisers who are effectively doing marketing on behalf of the provider.

"Sites such as the Money Advice Service (MAS) rely on the consumer making the first move. But for that you need advisers or a face-to-face discussion. Am I impressed by the MAS? No I am not. I think it is a complete waste of money. My money."

Schopp said direct-to-consumer channels could be seen as an opportunity for the industry as anything that helped people progress with protection cover was a good thing.

Clarkson said: "There is a strong argument for the models that lead people through the process online but offers advice at some stage. Integrating the systems this way has its attractions but not many are doing that because of the complexities of regulation.

"If we want people to have more protection and not rely on the state then the regulator needs to make that model easier."