RDR was never going to stop at the door of the IFA. And now it has happened. The European Union has published a report criticising the commissions paid by fund managers to insurance companies. Find it here
81% of insurance companies who outsource their fund management get paid commission and rebates by the fund managers and 25% of them have no process for selecting the fund manager other than the quality of the entertainment provided.
Action will be taken using the IDD that comes into force next January and the FCA’s resources will be further stretched as pressure comes for something to be done. Action will be inevitably come following this disclosure.
All the pain of regulation in the retail space and we find that after all, it was worth it. We work in an industry miles ahead of much of the rest of the financial services industry – particularly those non client facing hidden corners such as asset management and the management of insurance company funds. The IFA industry over the horizon from other industries in terms of standards and oversight. Note to self – we survived, we thrive and the latest FCA thematic review on suitability indicates that the worst may even be behind us – despite the best efforts of the “we help insistent clients take stupid risks” faction of the IFA community.
The EIOPA report is based on its thematic review of consumer protection issues in the unit-linked life insurance market arising from business links between providers of asset management services and insurance undertakings. It was published in 26 April 2017 and has only been brought to our attention by the excellent Pollyanna Deane column.
The thematic review focused specifically on potential issues for consumers arising from monetary incentives and remuneration payments from asset managers to insurance undertakings in the unit-linked market.
EIOPA's highlighted findings include that:
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