The FSA acknowledges that commission paid to IFAs has influenced their recommendations to clients. Why the regulator taken so long to act on something that is common sense - and was proven several years ago by the FSA's own research - is another matter.
At its disproportionate extremes, commission can account for up to 9 per cent of the initial investment on an insurance company investment bond. This means the IFA earns £18,000 on a £200,000 investment for a one hour consultation. But it is the products that don't pay commission where the major benefit to consumers may filter through.
Several years ago I attended a training day with a group of trainee independent financial advisers who were hoping to pass the first exams necessary to advise the public about their personal finances. To pass the client portfolio construction element of the exam, we were told that you had to include National Savings and Investment products within the portfolio. The mutterings and looks of disbelief among many of these trainee advisers was telling - none of them had any intention of recommending products from NS&I that did not pay commission, even though to pass the exam you had to acknowledge that NS&I's index-linked savings certificates, that give tax-free protection against inflation, should be an essential building block of anyone with modest assets.