Over three-quarters of advisers disagree with the Financial Services Council’s proposal to limit commission on replacement risk business, according to Guardian Advice.
As part of its submission to the FSC on its Replacement Business Framework, the dealer group conducted a survey of its advisers to determine their sentiment towards the Council’s churning policy.
78% of Guardian advisers said they did not agree with the proposed remuneration level on replacement business. A further 78% said they were not in favour of the proposal to increase the responsibility period to two years (with associated clawbacks).
Advisers were critical of nearly all the elements of the FSC policy, with over 70% indicating they did not believe the FSC had developed an appropriate definition of replacement business.
However, one area that did resonate with Guardian’s authorised representatives was the removal of takeover terms, with 65% agreeing this was an appropriate measure.
We believe that only a small proportion of advisers arbitrarily ‘churn’ business
Head of Guardian Advice, Simon Harris, said it was important for the group to give its advisers a voice on the issue.
“Through our own survey, we gathered our advisers’ opinions in the hope of working collaboratively to contribute to a sensible policy outcome on replacement business,” Mr Harris explained.
However, he said that the results of the Guardian survey show that the FSC has some way to go to convince advisers about the proposed framework and further consultation with the industry and advisers was needed.
“We believe that only a small proportion of advisers arbitrarily ‘churn’ business. However, we recognise this was an issue flagged by the Government when developing the Future of Financial Advice reforms, and we applaud the FSC for taking a leadership stance to address ‘churn’.”
