Financial service advisors fear effect of commission ban
Monday 29 October 2012
Banks, insurance companies and financial advisors fear the impending ban on commission will lead to consumers buying products they do not understand, the Financieele Dagblad reports on Monday.
From January 1, insurance agents will no longer be paid commission by banks and insurance companies on each mortgage, life insurance and funeral insurance policy they sell. Instead they will have to charge consumers for their advice.
Rabobank’s Rik op den Brouw told the paper there is a risk the price of advice will lead consumers to ‘do it themselves’.
Matthijs Mons, partner with IG&H Consulting, says people will either avoid such policies altogether or try and save on costs by buying a policy without advice. Another advisor told the FD advice on a single premium annuity would cost between €1,000 and €1,500.
The aim of the legislation, which still has to be approved by the upper house of parliament, is to improve the quality of financial advice to consumers.
Would you buy a complicated product without paying for advice? Have your say using the comment box below.
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Cut the greed at it's throat! It has been obivious that stock brokers, banks and advisers have not working in the best interest of the people that keep them afloat. A whole new system has to be worked out and those that cheat need to be punished in a big way.
By Al | 29 October 2012 8:21 AMA conundrum. If the bank pays the advisor, then independence is compromised and the consumer is likely to receive biased advice. If the consumer has to pay, they might try to save money and not seek professional advice.
What's missing from the market: how effective is the professional advice. I have as yet to receive any advice from one of these organisations that was remotely correct, useful or truthful.
By H. | 29 October 2012 3:20 PMYou may be sure that if people go buying themselves and end up with what they don't think is the right package, there will be claims against financial institutions not for mis-selling but for enabling the consumer to mis-buy!
By RJEB | 29 October 2012 5:18 PMAdvising on financial matters and then taking a commision on the decision taken is a huge conflict of intrest. I always tell people to get advice from someone who doesn't get commision, then make your transactions elsewhere. Commision by financial advisors has always been a disaster.
By Mark Holden | 29 October 2012 6:04 PMThis is similar to the policy on dental care, let the Service provider fix the price. And correct me if I am wrong but it has completely failed.
By Tomi | 29 October 2012 6:18 PMHow do you legislate fairness, honesty and trust? Still more daunting when there is a growing lack of common morality and ethic?
Does the financial sector not thrive on greed? People are looking for gains and growth but that frequently originates with losses sustained by others in the shark eat shark business.
A note of caution: Financial advisors with a very active trading profile could easily cancel out any benefits gained from the expertise of fund managers.
By Albert Kuyerhuis | 29 October 2012 7:31 PM