Private bank Cater Allen is changing its terms of business to allow it to sell directly to current and future advised clients.
In a note sent to advisers and seen by Fundweb sister publication Money Marketing, the bank, which is part of Santander, says it is removing the “no cross-sell guarantee”.
This means in the future the bank “may offer other Cater Allen or Santander Group products and services directly to customers where appropriate”.
The bank will also be removing trail commission on bank and notice accounts on new and existing business from 1 December.
Commission will accrue on daily balances until 30 November and will be paid in January 2016.
Cater Allen has already stopped accepting instructions to rebate commission to clients.
A Cater Allen spokeswoman confirmed the changes to commission policy and the plans to sell direct.
She says: “Cater Allen has recently undertaken a review of its commission policy together with its intermediary terms and conditions. Following this review, it has taken the decision to remove all commission paid to intermediaries for both new and existing client introductions.
“This will improve transparency for clients, is in line with market conditions and takes into consideration a changing regulatory environment.
“These changes started in May and are expected to be largely completed by January 2016. The bank is writing to intermediaries affected by these changes to provide more details and information on what this will mean for them.”
Rowley Turton director Scott Gallacher says: “This is the first time I’ve seen a provider be so explicit about approaching clients directly. It’s always been the understanding in UK financial services that providers don’t cut advisers out. The only exception is mortgages.
“If they sell to current and previous clients in addition to new ones that means the no-cross sell guarantee was worthless.
“If Cater Allen can get away with this, what’s to stop other providers? It’s a bad step for the industry to take; this sets a precedent.”
Providers have come under fire in the past for contacting advisers’ clients directly. This year, Aegon was criticised by advisers who said a campaign to update client details was an “excuse” to make contact.