Scottish Life has released figures suggesting increasing numbers of IFAs and their clients are moving towards more flexible commission structures.
The company says over 75% of their new business is now written using its Financial Advisers Fee (FAF) system, launched in 2003.
Alasdair Buchanan, group head of communications for Scottish Life, describes the system as one possible way of solving the remuneration problems currently facing the industry.
“The fact that around three-quarters of the provider’s business uses FAF demonstrates a practical way for IFAs to operate and highlights the way that the market can develop," says Buchanan.
"FAF mirrors the FSA menu approach to disclosure regarding charges. The adviser states what the charge is going to be, like a fee, but the amount is then taken from the product so it acts like commission. It combines the best aspects of both approaches and is transparent and clear while at the same time tax-efficient.”
Jim Smith, Scottish Life sales director, adds: “Whilst we are delighted to have produced something unique and genuinely appreciated by advisers we are also encouraged by the obvious desire from advisers to move on from the AMC-only products that have dominated the market. The FAF approach is fairer to customers as well as providing a sustainable business model for advisers and providers.”
Fay Goddard, deputy director general of AIFA, backs the FAF proposition, by stating: “We are very supportive of the concept of FAF. It is a good idea that we would like to see extended to other providers as an option. It is understandable and very transparent and we regard that as a positive move forward for the industry.”
The FAF scheme aims to offer advisers and their clients a fee-based approach together with ongoing commission payments from the product.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7968 4558 or email [email protected].IFAonline
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