Following its recent supervisory work, the FSA has published a "Dear CEO" letter sent to a sample of IFA networks and life insurers comprising of the largest retail investment product providers. The letter sets out its concerns that firms will seek to circumvent the commission ban under the Retail Distribution Review (RDR) by soliciting or providing payments or benefits that are intended to achieve the same outcome as commission payments.

The non-commission payments and benefits that are usually included within "distribution agreements" are provided as examples of ways firms may still try to obtain commission-like payments. The FSA notes that where a distribution agreement provides that all or most of the benefits under the agreement will be used by the distributor after the RDR implementation deadline (31 December 2012) this agreement may be caught under the adviser charging rules. Just because a payment may meet the FSA's inducement rules, it does not mean that it will be allowed under the RDR.

Firms must respond to the FSA's letter, confirming that any agreements currently in place, or under negotiation, are compliant with the inducement rules. Where that agreement is due to continue after 31 December 2012, the firm must also confirm that its terms will be compliant with the incoming adviser charging rules. This information must be provided to the FSA by no later than 15 October 2012.