The Financial Services Authority (FSA) has expressed concerns that an increase in advised sales of investment bonds by life insurance companies may be a sign of a commission grab ahead of the implementation of the Retail Distribution Review (RDR).
Presenting its latest product sales data, the regulator noted an increase in the proportion of bonds sold with advice by life insurers, from 24% in 2010/11 to 40% in 2011/12.
The data is submitted annually to the FSA by product providers and includes direct sales by firms' own sales forces, as well as sales made through intermediaries.
"Investment bonds sold by insurers act as ‘wrappers' for other products, and a quirk in the rules means that they will continue to pay commission after the RDR is implemented," the FSA said.
"There is a concern that some advisers will exploit loopholes in the RDR to continue to earn commission."
The FSA also noted a further increase in advised personal pension sales. It said this could reflect an increase in pension switching and pointed out this was an area in which it had previously acted because of unsuitable advice.
Overall, there was a decline in the overall proportion of products sold on an advised basis, from 67% to 60%, with particularly pronounced decreases with ISAs, occupational pensions and trusts and OEICs.
Meanwhile, a total of 2.46m retail investment products were sold during the period, down 11.2% on 2010/11.
However, the FSA said the data was potentially skewed by the fact it does not include sales made through platforms, which it noted are now commonly used by personal investment firms.
Despite the exclusion of platform data, personal investment firms, including financial advisers, were shown to have increased their share of the market from 42% to 44%.
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