Why will I have to pay for financial advice? Isn’t it free? Financial advice has never been free. Most independent financial advisers and all sales representatives of insurance companies and banks receive a payment for giving advice and selling products, known as “commission”. This commission is paid to them by the product provider, but is funded by charges deducted from the value of your investment or policy. So you have always paid for the cost of advice, indirectly.

 Why will I have to pay upfront? The Financial Services Authority has been concerned for some time that the amount of commission paid to advisers has influenced their recommendations to clients. This “commission-bias” is widely believed to have caused numerous mis-selling scandals in the 1980s and 1990s – such as the sale of mortgage endowment policies rather than repayment mortgages, and the recommendation of personal pensions to people with better company schemes. From 2012, the amount an adviser receives for recommending a product will be negotiated with you in advance, not determined by the product provider – removing the risk of bias.