Commenting on AIFA’s response, Deputy Director General, Fay Goddard, said: "The costs and impact of the ABI proposals should not be underestimated. We do not see any need for radical reform and do not believe that the proposals, if they were to proceed, would contribute significantly towards restoring confidence.
"To meet the clients’ needs, advisers need to retain flexibility of commission options. How, and in what shape, the commission is paid to the adviser is of less relevance than clarity of actual cost and clients should retain their right to choose how they wish to pay for advice."
Summarising the main points of AIFA’s response Goddard said: "We believe that the menu should be given sufficient time to deliver its objectives before considering further change. Its whole purpose is to help consumers gain a better understanding of the cost of advice and to provide transparency about commission levels.
"Industry reputation, not commission, is the real issue. There needs to be a concerted effort between industry and regulators to weed out the pockets of commission bias but at the same time there needs to be an awareness campaign to help dispel the poor perception of commission.
"Any move to abolish indemnity commission needs to be justified in its own right and not through accusations of consumer detriment.
"We would like to see focused consumer research once the menu has been in place for a period of time in order to assess its effectiveness.
"But there are aspects that do need changing, such as the removal of all links to LAUTRO scales and some simplification of commission structures. We would be happy to participate in further work in this area and to be at the heart of the debate as ABI’s thinking develops."
