Insurers still 'bribing' advisers, says watchdog

 

Thursday 19 September 2013 01:23 BST
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The City watchdog yesterday warned that major life insurers are still effectively "bribing" advisers to recommend their products despite the practice being outlawed by new rules that came in at the end of last year.

The Financial Conduct Authority said two firms, which it refused to name, are facing enforcement action after they were caught offering "inappropriate" incentives during an investigation of 26 leading life insurers and advisers.

Clive Adamson, the FCA's director of supervision, said the Retail Distribution Review, which came into force on 31 December 2012, had hoped to stamp out "advice that might be influenced by the commission payments made by product providers".

He said insurers that offer inducements to advisers may be flouting the rules.

Inducements include IT development and maintenance, staff training, conferences and seminars, hospitality, research and promotion-al activities.

Sarah Lord, managing director of financial planners Killik responded to the news by saying: "Providers are not helping the situation if they are offering 'bribes' and they should not be doing it, but honest and reputable advisers should not be swayed by a 'bribe'."

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