Advisers still pocket £1bn a year
Financial advisers were banned from taking commission on the portfolio of private investors in 2013 but a loophole means they are still pocketing £845m of investor money each year.
So called “trail” commission built in a contract before the 2013 ban was allowed to continue. The adviser who originally set up the contract typically receives 0.5pc a year in commission, which is built into the management charge investors pay. This means that advisers collected £845m from investors last year. Figures show that many investors will no longer have a relationship with these advisers nor receive advice from them. Even small increases in charges can have a dramatic impact on the long-term growth of an investment.
Your pension or investment provider must state if they are still paying out trail commission as part of your annual statement. If you discover you are paying you can contact the firm to remove the commission and so cut your fees.