Nick Hanson, director of Hanson Financial Management, made the comments in response to the FSA’s ongoing investigation into retail distribution, the initial report of which is due to be published this Summer. He said the IFA market as a whole relied heavily on commission and a move to a ‘fees-only’ model threatened small firms in particular, which make up a large proportion of the market.
Hanson said: “The FSA is trying to introduce something the public don’t want. I have never met a client who has felt they were not getting a whole of market view because of commission.
“The hard fact is people don’t want to pay and fees would decimate the IFA model. I believe the FSA wants massive consolidation in the market, but it is raising question marks over the IFA industry and undermining consumers’ confidence in professional advisers in the market.”
Hanson added he was aware some IFAs were trying to reach a compromise with the FSA for a common level of commission, but said this was not a sensible move, as it would not reflect the differing amounts of work involved in each case.
Robin Gordon-Walker, spokesman for the regulator, admitted a ban on commission would be a dramatic move for the FSA to make.
He added: “The review is underway and the FSA is considering all aspects of retail distribution, including remuneration. However, the review has not yet come to any conclusions and it is far too early to say what the outcome will be.”
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