22nd November 2011

Aegon: RDR Legacy Commission Ban

Last month we told you that we would keep you update with the latest developments surrounding legacy commission. As you are no doubt aware the FSA has now issued Consultative paper CP11/26.  In this consultation paper on the treatment of legacy assets under the RDR, the FSA says it plans to push ahead with its ban on legacy commission.

It defines legacy commission as additional commission that may become payable on legacy assets where there has been a change or addition to the product or investment post RDR.

The FSA says top-ups to a life policy or the buying of new units in a unit trust would come under the legacy commission ban.

The FSA has compiled a guidance tablehttp://www.fsa.gov.uk/pages/Library/Policy/CP/2011/11_26.shtml which sets out whether various typical situations such as advised fund switches and increase to monthly Isa contributions would be able to pay commission or not.

The FSA has clarified that commission can remain payable for non-advised top-ups.

Increases to regular contributions fall under the legacy commission ban. Re-registering a client’s assets held on one platform and moving to another payment appears to fall outside the ban. The FSA says: “This is unlikely to be advice because normally it will not involve buying and selling the investment held on the platform.”

Firms providing discretionary management services which “make changes to a client’s investment without providing advice” are also not affected by the ban.

Steven Cameron from our industry lobbying team looks at legacy commission in more depth and I would urge you all to read this http://media.aegon.co.uk/blogs/industry/?articles/2011/11/17/rdr-the-legacy-commission-ban.html

John Joe Business Consultancy Manager Aegon December 2011

RDR, RDR