New rules banning commission for financial advisers are expected to lead to a change in the types of investment product that investors are sold.

The Financial Services Authority (FSA) said this week that financial advisers would no longer be allowed to receive commission payments from product providers from 2012.

Instead, they will agree an upfront fee with the client that will be clearly separate from the charges on the product that they are being sold.

The FSA hopes that this will mean the end of the so-called “commission-bias” and ensure that consumers are sold products that are best suited to their needs and not to those of the financial adviser.

Providers of investments previously shunned by financial advisers because they do not pay a commission believe there will be more demand for their products as a result.

Investment trusts, National Savings and Investments (NS&I) and structured products are all expected to benefit from the new regime.

“The more advisers that move to a fee-based approach, the more likely they are to consider our products,” said John Prout, head of sales at NS&I.

Guy Rainbird, director of public affairs at the Association of Investment Companies, said: “If commission bias is no longer part of the equation, we would expect a broader range of advisers to be considering investment companies.”

Independent advisers will also be required to advise on all types of investment products, which is set to benefit providers of more complex products.

“Any firm putting itself forward as independent will need to get past any misunderstandings that have constrained its view of structured products,” said Chris Taylor at Blue Sky Asset Management, a structured product provider.

Sales of controversial products that have historically paid very high commissions to financial advisers are, in contrast, expected to fall. Investment bonds, which are offered by life companies and pay commission of up to 8 per cent, are expected to suffer.

But there are fears that regular savers who pay monthly premiums into pension products will no longer be able to afford advice, as the option of spreading payments for the advice over instalments will be banned.

This could also affect people with smaller pension pots who want to buy an annuity on the open market, as the cost of advice for switching their pension will have to be paid upfront.

Q&A: How financial advice will change

Why is the advice system changing?

The Financial Services Authority (FSA) now acknowledges that commission paid to advisers has influenced their recommendations to clients. This “commission-bias” is blamed for mis-selling scandals involving endowment policies, personal pensions and ‘precipice’ bonds. So, from 2012, the payment an adviser receives will be negotiated with you upfront.

Will I have to pay more for financial advice?

No. From 2012, the cost of any advice will be disclosed to you by an adviser in writing, before any recommendations are made. If you think these are too expensive, you can negotiate a lower cost or look for another adviser.

What if I can’t afford to pay upfront?

An adviser will have to give you the option of paying for advice through an upfront fee, or having the cost deducted from your investment. So you do not have to pay upfront, but deductions from your investment will affect the returns you receive.

How can I be sure the advice is really ‘independent’?

Under the new rules, all investment firms must clearly describe their services as either ‘independent advice’or ‘restricted advice’. Independent advice will be based on “comprehensive and fair analysis” of all products in the market place. Restricted advice will be limited to products from one or more companies. Two other forms of low-cost advice will fall within the ‘restricted advice’ definition: ‘Basic advice’ on ‘stakeholder’ products with a cap on their charges, and ‘Simplified advice’, from firms that sell products based on a personal recommendation.

Why do I have to pay at all? Isn’t advice free?

Financial advice has never been free. Under the current system, commission paid to advisers is funded by charges deducted from the value of your investment. So you have always paid for the cost of advice, indirectly.