The FSA has announced that commission can still be paid on fund switches within a life product, which the IMA disagrees with.

Following the initial consultation document last November, the IMA argued that allowing commission to be paid would create an ‘unlevel playing field’.

However, the FSA said: “Given that the trail commission relates to the product as a whole, we consider that the ban on new commission post-RDR does not affect the payment of trail where the product itself is unchanged, with no new money being paid into it.”

Julie Patterson, director of authorised funds and tax at the IMA, said: “We are very disappointed that the new guidance expressly allows investments underlying a life product to change and not be subject to the new RDR rules even where new advice has been given.

“This will lead to distortions in the marketplace, about which we have consistently raised concerns.”

“It is also disappointing that the FSA has decided not to include in the guidance explicit recognition that product providers and platforms can only act on the basis of instructions from advisers.”

Ms Patterson said she was pleased that guidance had been given on common scenarios such as automatic changes to investments due to portfolio rebalancing and investment increases agreed before the end of 2012.