Response to Financial Services Authority’s consultation on the treatment of legacy commission

Commenting on the announcement, Neil Stevens, Joint Managing Director of SimplyBiz, said:

“This is an area of anxiety for many and may even lead to providers withdrawing products where they cannot economically update the systems to accommodate the rules. The treatment of legacy commission also affects those advisers looking to sell their business during 2011 as passive trail forms the bulk of the value in many smaller firms.

One answer to this problem could be advisers working with managed portfolio funds which provide the ideal solution for the client and adviser if no ongoing advice is to be delivered. The client can access a strategy that will be managed, by a professional firm, to their ongoing needs and the problems involved with ‘advised’ switching to maintain the client’s portfolio simply disappear. So long as the portfolio funds are available in all of the places the adviser has historically written their business this presents a one-time opportunity for advisers to evolve the legacy book to the benefit of their clients and their business value and revenues.

We are aware of literally hundreds of firms that are moving to this model in preparation for RDR.”

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