The U.K.’s Financial Services Authority has abandoned plans to force that country’s brokers to charge fees, rather than commissions.

To address concerns over commission bias, the FSA had earlier proposed that independent financial advisors should operate a so-called “defined payment” method of charging their customers. It now says, “However, in the light of consultation responses and following constructive suggestions from the industry, the FSA has decided that the objectives could be better met instead by developing a so-called ‘Menu’ approach.”

The ‘menu’ is envisaged as a document provided to consumers in the early stages of the sales process. It would set out: an outline of the services the adviser is offering; for independent advice, the option of paying by fee and a fee scale; where offered, the option of paying by commission and, for a range of popular products, the commission that the adviser normally charges, set alongside average rates charged in the market.

The FSA will now work with the industry to develop the ideas fully and will consult next year on draft rules for the Menu. It is aiming to develop ways of applying the menu approach across all advice channels, not just the independent sector.

In Canada, similar issues are being discussed as part of the Ontario Securities Commission’s Fair Dealing Model. While it wouldn’t ban commissions, it does contemplate scrapping third-party compensation, as part of a broader move to shift the regulatory focus from transactions to advice. The OSC has been looking at the FSA’s work as part of its work on these issues.

The OSC has posted an online version of its proposed model at www.fairdealingmodel.com to invite comment from the industry and investors. Comments are due by the end of the year.