Towry Law has added its voice to controversial calls to end commission and find an "alternative" method of payment for advisers.
The financial planning and wealth management company has outlined five major changes it says need to be made to end practices that lead to what it terms "inappropriate advice".
In addition, the firm also says the £3.2bn worth of commissions paid every year amount to "bribery" from product providers to attract new business.
The comments follow hot on the heels of controversial remarks by the Financial Services Consumer Panel last weekend, which also suggested the FSA needed to consider a change in an IFA's remuneration method.
Towry Law's suggested changes, which form part of its manifesto for "integrity" in the financial services industry, are:
- The abolition of initial and trail commissions
- Higher minimum educational standards within the industry
- Outlawing ‘soft-comissions’
- Advisers demonstrating their ability to offer holistic advice based on financial objectives of clients
- More stringent tests before advisers use the ‘independent’ label.
Towry Law says unless radical action is taken the financial advice industry and the well-being of consumers will suffer "lasting damage".
Andrew Fisher, chief executive at Towry Law, says: “The industry has shown it cannot be trusted to reform quickly enough and it is now time for the FSA to move from its previous consultative approach and step in and impose change.”
This move is likely to further anger IFAs who feel the removal of commission is limiting the choice of consumers rather than protecting them.
Towry Law has released a report, entitled Independent Wealth Advice in the UK, which aims to outline problems with the industry’s integrity, and proposes remedial measures.
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