In a radical overhaul of the rules governing independent financial advisers, Britain's Financial Services Authority said payments from fund managers and life assurers to advisers would be outlawed in three years.
“This is a great day for the consumer,” Andrew Fisher, chief executive of advice firm Towry Law, told The Financial Times.
“It is a ban on the bribery and corruption that has plagued the industry,” Fisher said.
Industry observers expect thousands of independent financial advisers — up to half the IFA industry — will leave the business as a result.
The authority’s ban will prevent product providers from offering commission in order to secure sales and ban advisers from recommending products that automatically paid commissions.
Instead, the amount the advisor receives for recommending a product will be negotiated with the investor.
Under the new plan, investors will be told immediately how much the advice they receive costs and can choose whether to pay a fee or have the cost deducted from the money they invest.
The volume of British securities business rose in the second quarter for all securities trading respondents, the Hedge Fund Review reported. Fee, commission and premium income recorded strong growth.
Investment managers reported business volumes were broadly unchanged from the previous quarter and the rate of decline in profitability had eased on the previous survey, contrary to the unanimous fall predicted earlier.
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