The Financial Services Authority (FSA) in the UK is aiming to regulate planner commissions out of existence – but in reality this is going to prove very difficult.

This was one of the views expressed at a roundtable discussion at the Retail Distribution Review (RDR) organised by self-invested personal pensions (SIPP) provider Pointon York in London last week.

Under the RDR proposals, only professional advisers would be entitled to call themselves ‘independent’ and would have to give advice on the whole of the market and be paid by fees.

General advisers, accepting commissions, would not be able to call themselves independent, while a lower level of primary advice would be offered on straightforward mass market products.

It is widely envisaged that most IFAs would become general advisers, which the FSA sees as a temporary stage to be later removed, with primary advice being offered by high street banks and the like.

Professional independent advisers would be drawn from the estimated 3% of advisers operating on a pure fees basis at present, plus other upwardly mobile advisers ready to move from commissions to fees.

The FSA is, it seems, finally determined to remove commission bias as it believes it is a cause of product mis-selling.

But cynics point out that advisers and firms will find ways of getting around the regulations and that commissions are used as a remuneration method in many forms of business.

Advisers would also say most clients don’t want to write out a cheque if a provider will pay for their advice by commission.

Fees are not tax-efficient either, as VAT is incurred.

Another interesting point is the role of the financial services firms that rely on IFAs for product distribution.

In the past, they have supported commissions.

But now their trade body is supporting the FSA, as it seems providers are now tiring of stumping up large commissions only to lose the business within a few years under more flexible contracts than existed in the past.

The big banks remain the other elephant in the room.

If they offer ‘simple’ products from primary advisers, will the general public really be better served than in the past? How trusted are the big banks?

Excessive charging on overdrafts, sloppy service and the closure of less popular branches could mean that banks are not as well-placed some think in becoming a one-stop shop for financial services.

Financial advisers in the UK are a resilient bunch, so we should not write their obituary just yet.

The real threat to their existence is the drop-off in their numbers over time, as most are relatively old, as past CoreData UK research has found.