IMA Calls for FSA to Ban Legacy Commission on Fund Switches Inside Packaged Products

The Investment Management Association (IMA) is calling on the FSA to place an outright ban on legacy commissions for fund switches inside packaged products that would start from next year. The move places it at odds with a number of fellow trade bodies, including the Association of British Insurers (ABI) and the Association of Independent Financial Advisers (Aifa). They are calling on the FSA to clarify their existing rules and believe the clause would prevent market distortion. However Aegon has recently claimed that the ban would have a negative impact on pensions uptake. The IMA is taking the opposite stance though, claiming such a ban would increase confidence by decreasing bias towards such products, The IMA commented "In a number of circumstances investments within a wrapper can change but commission will continue to be paid because the wrapper has not changed. In contrast, any change to a direct investment immediately ends commission payment."
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