Financial consumer advocates suggest that the end of embedded commissions in Britain could be the key to rebuilding public trust in the industry.
In a speech Friday Kay Blair, vice chair of the UK Financial Services Consumer Panel (FSCP) welcomed the looming end of embedded commissions in the investment market — starting in January 2013, new rules outlawing payments from product manufacturers to advisors, among other reforms, takes effect.
Blair indicated that the FSCP believes these changes will drive greater transparency for consumers and, in the longer term, encourage competition. She also expects this will produce a new era of professionalism for advisors that “will prove highly significant”.
“Consumers will benefit greatly from knowing that advisors are acting in their clients’ interests, uninfluenced by payments made by product providers,” she said. “It has taken many years of debate and deliberation to put in place a regulatory structure for investment advisors that is fitting for a profession with such a key role to play in the lives of so many consumers.”
“If investment advisors succeed in rising to the challenges and seizing the opportunities presented by the [reforms], we may see January 2013 as the turning point where the financial services industry begins to regain public trust,” she concluded.