The regulator has been working hard over the last six years or so to get all financial advisers to the point where they have to agree fees for their work with their clients. At the moment, believe it or not, most advisers are paid to sell products and the amount that they receive is not determined by either the client or adviser, but by the product provider (manufacturer). I know that our clients might find this rather odd, given that it is not the way that we operate, we have always agreed fees with our clients. Sadly for many this has not been their experience, hence the constant financial scandals.

The UK regulator took the decision to ban commission, which whilst on the surface looks sensible, is even to my (anti-commission) mind, somewhat short-sighted. The issue is not really how an adviser is paid (commission or fee) but that it is a properly agreed amount and that people are not lulled into the deception that the advice is free, when clearly it is not. The main problem being that under the new regime, most people will not be able to afford the fees that advisers need to charge to do the job properly. I’m one of those that believe this. This week the European Parliament have warned that “a commission ban goes too far as it limits the freedom of choice for ordinary investors and those most in need of advice would not be able to afford it. A more balanced approach is needed”.

So we find ourselves in the unusual position of the EU defending the position of the UK consumer. This of course creates a complete system overload for many financial advisers who tend to view the EU as the source of most of their problems and rules that the UK seem to adopt and enforce before anyone else (within the EU) has even “opened the letter”. The new regime, which has cost all firms a significant sum of money, starts on January 1st 2013 and whilst the EU statement does not prevent the UK regulator from doing as it pleases, it must surely suggest that further pausing for thought may be prudent, if only to address the issue of how those that cannot afford fees will obtain anything approaching good financial planning advice.

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