The old ways persist
Yesterday, I was contacted by a provider which offers a product to IFAs that is not itself a regulated product (although the provider is regulated). I have nothing against the company itself, nor the kind of product which appears to have some merits that Financial Planners might wish to make use of (at times) for certain clients. I shall therefore consign the provider to a kind of blessed anonymity, as my intention is not to prejudice ValidPathers against it.
But the conversation was, never the less, an interesting one. Because the subject of the call was a relatively new one to me, and because, clearly, I was in need of a little persuasion to consider the matter seriously, the sales consultant told me about "other Networks" which were happy to promote the matter to their Appointed Representatives. These included Tenet, Sense and Chase de Vere. The mere mention of the names was, I guess, intended to impress me. Unfortunately, that was not the initial effect.
Sensing this, the sales consultant moved on to mention the fact that there was a 'commission' to be paid, which (in the cases of those other intermediary firms) was split between Network and AR firm. That is to say, the AR would receive one kind of payment, and the Network, by virtue of that transaction, would receive another kind of payment.
Suddenly, it felt as if I were starring in 'Back to the Future'. This was pre-RDR world, all over again. Here we had Networks which, in addition to extracting their own charges from their ARs, were also being rewarded with back-handers from product-providers. Clearly, RDR had driven a cart-and-horses through this kind of practice, but these Networks had discovered a backdoors way of continuing their old, old habits - simply because they could.
This raises interesting questions, doesn't it - about what RDR seeks to achieve within the marketplace, and about the 'spirit' that firms exhibit in terms of their application and outworking of RDR principles. If one believed in the kind of business model and ethos ushered in by RDR, then one would not seek to preserve the 'old ways' in those areas which did not explicitly fall under the purview of the FCA, surely? And that would also tend to suggest that, within explicitly regulated areas, practices would be tend to be dictated by mere compliance, rather than a settled commitment to best practice?
In the interest of complete clarity...
The only revenues ValidPath receive, are those which are calculated each year in relation to our Member Firms. No backhanders from software houses, no overriders from product-providers, no bribes to go on panels, no equity handouts from platforms...