2012 : The Year of the Churn

In China next year will be the Year of the Dragon - in the UK it looks set to be The Year of the Churn.

The reason? From 2013 IFA's will be banned from taking commission from clients, except there is a loophole as watchdog Consumerfocus notes.

It is particularly galling that existing customers will continue to pay trail commission on their newly written contracts – introduced just before the ban – potentially for several decades.

So there's an immediate incentive to get clients into contracts - or if they are already in contracts to switch them to higher paying one. And this process may may have already started - there's evidence of a pick up in activity in these areas.

Commission based advisors usually get paid a lump sum from companies they steer their clients into, plus an ongoing 'trail commission' of around 0.5% a year. Quite what this is for is unclear. Some see it as deferred fee, others as for 'continuing service'. And it can go on for years and years.

The RDR (retail distribution review) will end trail commission - but in the short term it may have increased it.