The Financial Conduct Authority (FCA) can take many forms of action against brokers that do not charge fair commissions – but the banning of commissions or brokers is off the table, according to Sheldon Mills, executive director for consumers and competition at the FCA.
Mills (pictured) was speaking at a press conference following the regulator’s annual public meeting held today, which discussed its 2022/23 annual report and accounts.
He said fair value is effectively what a broker itself charges, having undertaken a fair value assessment based on knowing what it is going to provide.
“It’s not for us to say what that commission is. It’s not for us to determine that – in each individual relationship between a customer and a broker,” Mills continued.
He added it was up to the broker to assess what the value is for its customers.
“But it is for a broker to work that through and to record and have evidence across its target market,” he continued.
“There’s more work for the broker community to do in terms in terms of valuing its service.
“And as I’ve said in relation to Consumer Duty, there’s more work for all of the industry to do in order to value the service that they’re providing to customers – not just brokers.”
Its not about banning
And though there may be a number of actions that the FCA can take against a broker who does not charge a fair commission, it was not about banning either commission or brokers, he maintained.
“This is not about banning commission and brokers. I should make that clear,” Mills said.
“It’s about brokers ensuring that they’re setting, the right sort of value they are providing when charging that commission.”
He noted that with the Consumer Duty there is a range of actions that the FCA can take.
“The spectrum of action that we could take ranges from supervised reaction with individual firms through to considering other forms of enforcement action,” he continued.
“But I’m not going to say what forms of action we’re taking here.
“We are asking the broker community to ensure that it’s looking at expanding chains and starting to ensure that the commissions in this market are providing value to the customers,” Mills concluded.