That meant the range of products recommended to Sesame clients under its restricted advice service was influenced by the amount product providers were willing to pay Sesame for certain services.
Such a scheme “undermined the ban on commission payments brought in by the Retail Distribution Review (RDR)” at the end of 2012, the FCA said, though up-front payments from product providers to secure a place on distribution firms’ ‘recommend lists’ has been censured repeatedly by the regulator for a decade.
Cowan, (pictured) who was parachuted into Sesame in January – at the very end of the two year period the FCA investigated -, to “get management on a good footing” after three previous fines totalling nearly £7m and censures from the regulator for a string of failings at the firm, said it was “correct” Sesame be “castigated” for the pay-to-play scheme.
But he added that the adviser network, the UK’s largest, was far from the only firm to be giving preferential rights to those product providers with the deepest pockets.
“Sesame are not alone in that,” he said. “It was not uncommon in the market before 2012 for large distribution groups to sell services to product providers. That went on for a number of years.
“The culture of getting onto a panel by buying marketing grew out of that,” he said.
Cowan said that from the beginning of 2014 the practice had stopped at Sesame. However he admitted deals done with product providers on a pay-to-play basis are still in place.
Sesame is undertaking a review of the make-up of its restricted panel, he said. “We’re asking ‘is this the appropriate panel for the marketplace, would the panel look like that without the inducements?’
“But these are legal contracts. It’s a complex matter,” he said.