Investment - Articles - FCA ban on annuity commission can’t come soon enough

 A ban on commissions would bring brokers in line with the Retail Distribution Review (RDR), which has worked very well on the advised side. Replacing them with fees would allow consumers to see exactly how much they would be paying and what annuity rate they could get as a result. It would also make the choice of paying a financial adviser or broker easier to make as any additional money to be paid for getting full advice and the protection that brings would be easy to quantify.

 A happy consequence of a ban on commission would be an end to the practice of preferential rates being given to select large brokers. For years, it has been a lottery as to whether a client would get the very best rate depending on which whole of market adviser they went to, and not even the adviser would know if a higher rate existed elsewhere.

 It is also important that any proposed solution by the FCA is simple and transparent, avoiding the use of prescriptive, technical language that often makes the process more confusing for the client.

 Jamie Smith-Thompson, managing director of Portal Financial, said: “The FCA successfully banned commission on most financial products as part of RDR, but annuities and life insurance were for some reason excluded. It is about time that brokers were brought into line so consumers can compare apples with apples when considering what service to use and what value they are being offered.”