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The definition of the word ‘secret’ has been at the heart of a heated, but well-mannered, exchange between the BBC’s Paul Lewis and Yorkshire-based IFA Neil Liversidge this week. The topic: Trail commission.
It all started with a segment on Radio 4's Money Box on Saturday (listen HERE, requires Flash), looking at the contentious issue of renewal commission and whether clients a) know they are paying it, and b) they should be.
It follows on from the launch a week ago of paymemy.com, the controversial venture backed by entrepreneur Ivan Massow, which aims to hunt down and refund to customers any 'unearned' trail commission (taking a 20% cut).
Lewis opened the segment by describing trail commission as "one of the industry's best kept secrets" and Massow went on to explain the new service and why consumers might be unnecessarily paying ongoing commission at the moment.
The show also touched on the retail distribution review, how it will affect commission and, potentially, leave a large number of consumers without an adviser.
Over to Liversidge, an AIFA Council member and not someone who keeps quiet when he hears what he believes are ill-informed remarks.
He took umbrage with Lewis' description of trail commission as a 'secret' and, in an open letter, proceeded to explain how his clients knew exactly what it is.
He also detailed how he earns his trail commission and the work he sometimes does for free for people who call or approach him.
Liversidge added: "You purport to be a consumer champion but in reality all you are propagating is financial short-sightedness in the buying public, and a false belief that they can expect advice and ongoing service for free."
He concluded by calling for an apology and urging Lewis to set the record straight on air.
Over to Lewis, a well-respected and multi-award winning consumer journalist, who gave a measured, lengthy response to the complaint.
He defended the use of the word 'secret' by citing research on the lack of awareness of trail commission and gave some examples of cases he knows about where advisers have earned significant amounts for dubious work.
Lewis also said trail commission was sometimes only mentioned in the "small print", suggesting it could easily be overlooked.
Although he accepted plenty of advisers were honest and deserved the trail commission they receive - not to mention that some 'trail' commission is simply initial commission paid in instalments - he was not prepared to back down on his statement and refused to apologise.
But this was not the end of things and this morning Liversidge posted another open letter in response.
Referring to dictionary definitions of the word ‘secret', he insisted Lewis was being "unfair and misleading" and questioned the outcome of the research showing consumers' lack of understanding of trail commission.
He added: "In order for ‘100% [to] be aware of it and what it is for' - and admit that they do - we will probably need to develop some type of mind-control system. I fear that brainwashing might be just a bit outside my skill set but I fear not beyond yours."
This is unlikely to be the end of the matter and IFAonline will keep you updated on any more developments.
READ THE FULL DISCUSSION HERE.
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Lewis v the truth
Is the secret of renewal commissions like the BBCs secret wage bill regarding Paul's remuneration package for having his award winning opinions? The BBC, a public body, not publishing it's payments to employees seems a long way from Key Features and commission disclosure documents which take no account of business and regulatory overheads. Sauce Goose ansd Gander come to mind.
Posted by: Terence P. O'Halloran
Trail Commission
The BBC are a disgrace. Funded by an immoral tax, the BBC have massive power and influence and yet are rarely ever taken to task on its deliberately misleading reporting. THE FSA and the BBC, have a lot in common - Messianic, self-righteous and blind to the facts.
Posted by: Bill Wells
One sided reporting
well said Bill i thought it was just me but for a long time now, the BBC have in my opinion been very biased not just in the way they report so called factual stories, but in the people they interview, just look at the BBC news over a period of time and you will see a pattern emerging, whether this is someone at the top in the BBC or a directive by the Government,we can only guess but it is apparent in nearly everything they do such as the programme on pensions a while back totally one sided and not at all factual, the result is they are now saying that less and less people are putting money away for retirement, if i had watched that programme i would do the same, the problem is it was not the truth and has probably contributed to the lack of saving in pensions etc, now being seen, the BBC FSA etc have a moral obligation to get the truth out there, if we did suitability letters the way the BBC does programmes we would lose our license
Posted by: Geoff
Goodness, we are upset aren't we
Paul Lewis seems to have touched a raw nerve but this sort of childish nonsense doesn't do the trade's image any good. If you were after public esteem you're in the wrong game because you won't get it as salesman - whether that's selling insurance, investments or double glazing. Just bite your tongue and think of the money.
Posted by: Peter Dixon
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Damascian Conversion
You never know the Saintly Paul may even have a Damascian conversion. I have just sent this email to Neil Liversidge, who good to his blurb promptly and positively responded. "Dear Mr Liversidge I have just read your open letter. Well done. I am fed up with all news media (the specialist financial media included) for their strident 'make a story' at all costs ethos. Unlike ourselves, other than the law of libel and slander, the media have no real regulations to abide to. I do not listen to Money Box anymore - haven't for a while (turn off the radio as soon as its trailed) - or rarely now to other similar 'news' programmes either. Indeed I stopped watching Panorama altogether a few years back when they did one of their perennial pensions exposes. There was so much wrong with it I asked myself if they get so much wrong on a subject I know about, how much can they get wrong on subjects I am ignorant about? I have become lethargic which is no way to get things changed. Indeed I wake up to Radio 3 now rather than the hysterical Today programme. Far better for setting the mood of the day. However every word you wrote is accurate. Sometimes I feel more like a social worker than an IFA. From your picture you look quite young. Next year I am off (the arrival of RDR is simply serendipitous and was not the cause) and for that I am glad. I wish you well and will be obliged if you could let me know if you do get anywhere with the saintly Paul Lewis. In all sincerity good fortune and good hunting. Yours sincerely Geoff Pollock"
Posted by: Geoff Pollock