Former IFA Ivan Massow has closed down his trail commission return business after less than two years due to escalating regulatory and professional indemnity costs.
Massow launched the proposition in September 2011 which pledged to return the majority of trail commission clients were paying if they switch from their current adviser.
Massow said the business would return 80 per cent of the trail commission and keep 20 per cent itself and targeted clients who were not receiving any ongoing advice.
Speaking to the Independent at launch, Massow said: “The first priority of our advertising campaign is going to be education. Most people simply don’t know they’re paying these fees – not a single person I’ve asked knew of their existence.”
On its website, the firm said: “You probably haven’t heard of ’trail commissions’, but up to 1.5 per cent of the value of your investments each year could be paid out to your Independent Financial Adviser as commission. We will find this commission and pay 80 per cent of the full amount back to you. This means that on a typical pension we would send you more than £60,000 over the term of the policy.”
However, a new note on the firm’s website, posted yesterday, says: “As of Monday 19 August 2013, Massow’s will no longer be offering a commission recovery service to customers. This is due to the escalating costs of FCA regulatory fees, levies, and the costs of PI insurance which is mandatory (even though there is no PI liability to companies like ours as we do not provide regulated services).
“In brief, this means we now make a loss every time we pay commission back to a customer because the FCA class it as regulated income received by us, rather than the unregulated income rebated to the customer which it actually is.”