IFAs across globe embrace tougher regulations

IFAs around the world have responded positively to the challenges of the financial crisis and welcome stricter regulations, according to the Association of International Life Offices (AILO).

A consultation with the heads of 20 leading IFAs in Europe, Dubai, Singapore and Hong Kong found their firms view tighter regulation - whether in the form of the UK's RDR or the Australian model - as inevitable.

Furthermore, IFA chiefs think the increasing tide of regulation will improve professionalism and competitive advantage.

The consultation also found the financial crisis has accelerated a move towards ongoing sources of income, although upfront commission will likely remain part of the mix for some time.

"The incidence of fee-based charging for advice and service is likely to increase, but this is unlikely to take over from commission-based charging unless forced by specific regulations," says AILO.

There was also a consensus view a gradual move to a new adviser remuneration model is required. This would combine lower explicit upfront commission with a mix of fee and fund-based annual renewal payments for ongoing service.