Is the end of commissions for brokers nigh ?

O

OPTIMUM

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FSA in UK looking to ban commissions from 2012, and George Lee has already starting raising it as an issue.


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These type of sales people should b outlawed. What is on offer in Ireland is a farce out of all proportions. At this moment in time I am unable to place my own experiences in writing. Tomorrow week I have a High Court case involving one of the largest Financial Providers in Ireland, who has chosen to Appeal against the Ombudsman. This is their legal right, but rather than accept the company was in the wrong, they have chosen to delay the matters, which has taken me three years to get this far. When the matter has been completed it remains my intentions to publicise my experiences of which I would never wish such an occurrence on my enemies. Till then I will have to hang fire, but for those that wish to read a full nightmare story of blackmail, deceit, false figures and pure mis-selling watch this space.
 
It's a very good article by Marc Westlake and the UK story is interesting, but I think there are some practical issues with abolishing commission entirely.

For example, fee-based advice tends to lend itself towards those on higher incomes, where the fee represents a relatively modest portion of the overall outlay. But what level of fee (initial and ongoing) do you charge someone who's personal circumstances dictate that they can afford a maximum of €100 per month into a PRSA? Or who just needs a €30 per month Mortgage Protection life assurance policy?
 
With consolidation there will only be a handful of players in the Irish market. These will have their own in-house brokers and will sell direct themselves.

As the intermediary market share of total business falls they will be squeezed out of the market and will rapidly become surplus to requirements. There won't be a commission problem.
 
Its already started with the mortgage market,with commission now as rare as hens teeth - brokers churned the books ultimately making the commission model uneconomic. Now that the level of transparency is increasing, I think it will only be the higher income levels that will see a value for advice - everybody else will go to their credit union or big bank and beg for credit or make an investment.
 
If Sumatra and Optimum are correct, it will be a bad day for consumers. This sounds like a two-tier system, where those on modest incomes will have nowhere to go but directly to a provider, who will have no interest in offering a competitive deal, and the good deals will only be available to those on high incomes.
 
Red said:
Best of luck mercman
Click to expand...

Thank you Red.

To the other Posters, the points you have raised are in variance with each other. Sure I was offered a deal from the Provider and because it was directly from the FP themselves, I thought it was safe and credible. The same deal was on offer more or less the same from Independent Brokers but I stupidly went to the FP, for safety sake. Moving forward the only manner in which some of the options will work is to have a Template for Investments. If Mr.X invest €x he gets ABC. If Mr.Y invests €y he shoukld get DEF etc.etc.

As it stands I would say that the majority of Investors in the public have no clue whether they were screwed or not. They would not know if they got a good deal, a bad deal or a great deal. Strange way to run a Financial Business which is meant to be under the Microscope of the Regulator. Fact is the FR doesn't really care as he is more inclined to look after the Home market and the local FPs.

I did it by the book and look what happened to me. Got the lot in writing and still got pasted - That was for a very large lump sum. What is the average Joe supposed to do ??
 
Mercman (Mark, I assume),
Which institution is in your firing line? I'd be interested to know. If you chose your wording correctly, there should be no risk?

Rory Gillen
 
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