The definition of the word ‘secret' has been at the heart of a heated, but well-mannered, exchange between the BBC's Paul Lewis and Yorkshire-based IFA Neil Liversidge this week. The topic: Trail commission.
It all started with a segment on Radio 4's Money Box on Saturday (listen HERE, requires Flash), looking at the contentious issue of renewal commission and whether clients a) know they are paying it, and b) they should be.
It follows on from the launch a week ago of paymemy.com, the controversial venture backed by entrepreneur Ivan Massow, which aims to hunt down and refund to customers any 'unearned' trail commission (taking a 20% cut).
Lewis opened the segment by describing trail commission as "one of the industry's best kept secrets" and Massow went on to explain the new service and why consumers might be unnecessarily paying ongoing commission at the moment.
The show also touched on the retail distribution review, how it will affect commission and, potentially, leave a large number of consumers without an adviser.
Over to Liversidge, an AIFA Council member and not someone who keeps quiet when he hears what he believes are ill-informed remarks.
He took umbrage with Lewis' description of trail commission as a 'secret' and, in an open letter, proceeded to explain how his clients knew exactly what it is.
He also detailed how he earns his trail commission and the work he sometimes does for free for people who call or approach him.
Liversidge added: "You purport to be a consumer champion but in reality all you are propagating is financial short-sightedness in the buying public, and a false belief that they can expect advice and ongoing service for free."
He concluded by calling for an apology and urging Lewis to set the record straight on air.
Over to Lewis, a well-respected and multi-award winning consumer journalist, who gave a measured, lengthy response to the complaint.
He defended the use of the word 'secret' by citing research on the lack of awareness of trail commission and gave some examples of cases he knows about where advisers have earned significant amounts for dubious work.
Lewis also said trail commission was sometimes only mentioned in the "small print", suggesting it could easily be overlooked.
Although he accepted plenty of advisers were honest and deserved the trail commission they receive - not to mention that some 'trail' commission is simply initial commission paid in instalments - he was not prepared to back down on his statement and refused to apologise.
But this was not the end of things and this morning Liversidge posted another open letter in response.
Referring to dictionary definitions of the word ‘secret', he insisted Lewis was being "unfair and misleading" and questioned the outcome of the research showing consumers' lack of understanding of trail commission.
He added: "In order for ‘100% [to] be aware of it and what it is for' - and admit that they do - we will probably need to develop some type of mind-control system. I fear that brainwashing might be just a bit outside my skill set but I fear not beyond yours."
This is unlikely to be the end of the matter and IFAonline will keep you updated on any more developments.
READ THE FULL DISCUSSION HERE.
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