CUSTOMER AGREED REMUNERATION - CRA International

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REPORT BY CRA INTERNATIONAL Intermediaries will only be able to adopt CAR if providers have made the products available and where they do, they are likely to initially use similar advice charges to today’s commission structure. Only over time will innovative new structures emerge and this is likely to correspond to a changing role of nationals, networks and service providers. Providers will need to change their systems and also how they compete in the market. This will also evolve over time. If the regulator provides clear principles and guidance regarding how CAR should be implemented, the obligations resulting from TCF should encourage providers to compete for intermediaries through offering better products for consumers. Alternatively there is a danger that too much flexibility around CAR allows competition for intermediaries to focus on characteristics that are not necessarily to the benefit of consumers. Therefore we conclude that an indicative CBA finds evidence in support of applying CAR to the non-tied market, with a phased introduction of CAR starting with packaged investment products. Based on the development of products to date and the gradual take-up by intermediaries, a 3-5 year time period would be appropriate but will only be achievable with regulatory support of CAR style models otherwise it will remain only in market niches. Some benefits from CAR will arise in the short-term after implementation but changes in consumer behaviour are likely to take longer to emerge indicating that a longer period of time will be required to assess whether CAR brings about such behavioural change. 8
ACKNOWLEDGEMENTS CUSTOMER AGREED REMUNERATION During the course of this project we spoke to, and gathered data from, a wide variety of intermediaries, providers and other industry participants. We would like to thank all those who were involved in this research. 9
Page 1 and 2: ABI RESEARCH PAPER 6 CUSTOMER AGREE
Page 3 and 4: EXECUTIVE SUMMARY CUSTOMER AGREED R
Page 5 and 6: CUSTOMER AGREED REMUNERATION offer
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Page 16 and 17: REPORT BY CRA INTERNATIONAL 2.0 2.1
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Page 54: For more information, contact: Asso

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