Commission disclosure - financial advisers

Since the beginning of 1995, independent financial advisers ( IFA's ) and tied agents have been forced to disclose the level of commission they will earn from selling financial products to their clients.

The move was implemented by the then regulator of retail financial services, the Personal Investment Authority ( PIA ). The PIA has since been subsumed within the financial watchdog, the Financial Services Authority ( FSA ).

Commission disclosure was seen as a major step forward in consumer protection. However, consumer watchdogs still argue it doesn't solve thereal problem because it doesn't provide the investor with a comparisonbetween the commission earned on one type of investment and that earned on another.

Some say the best solution would be to remove commission from the equation completely. In other words the adviser and the client agree a fee or a time-costed rate before any advice is given.

However, this may present another difficulty because not every potential investor wants to pay up front for advice.See also:Moneyextra's advisers are available on 0845 145 0145

Last Updated: May 2007 © Moneyextra.com

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