Weinberg attacks IFAs' commission
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.SIR MARK WEINBERG, one of the leading architects of financial regulation in the UK, yesterday launched a blistering attack on independent financial advisers, accusing them of an inherent conflict of interest which misleads clients and restricts competition.
In a lecture to the Linked Life Assurance Group in London, Sir Mark said financial regulations were working against the interests of millions of policyholders who were wrongly led to believe the advice they were getting was independent.
Sir Mark, who designed key parts of the 1986 Financial Services Act, said the independence of financial advisers (IFAs) was compromised by the level of commission they received for selling an insurer's products.
"I cannot think of a greater conflict of interest ... An IFA would not recommend an Equitable Life term assurance policy even if its rates were the lowest of the market - nor would he recommend a Virgin tracker fund unit trust," Sir Mark said.
He accused networks of independent advisers of using their marketing muscle to negotiate higher commissions from the life offices whose products they sell.
"The people who run the networks will put their hands on their hearts and say that they choose the life companies purely on merit and without consideration of the commission rates offered ... Their position can only be described as one of a conflict of interest and a pretty fundamental conflict at that.
"I just do not believe that, if a particular life company produced a highly competitive product and kept its commission [low], the networks would all put that company's product on a must-recommend list. The management of networks spend far too much of their time negotiating commission levels with life companies for anyone to believe commission does not play a part."
Independent financial advisers usually take commission from a life company which passes on the cost in the form of higher charges to the policyholder.
The higher the commission they charge, the poorer the policy benefits.
Sir Mark is now calling for a shake-up of regulations which would bar IFAs from calling themselves independent unless they refuse to take commission.
Jim Gaskin, managing director of Countrywide, one of the largest networks of IFAs, said: "It is sad Sir Mark is long on rhetoric and short on fact. Many of my members sell Equitable Life and National Savings policies and one of the most recommended offices is Standard Life - which doesn't pay the highest commission."
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments