Consumers getting an investment or pension product via a financial adviser may have to pay an upfront fee from the end of 2012.

This is a result of new rules announced today which will ban commission payments to intermediaries (see the Financial Advice guide).

This does not mean you will necessarily pay more as commission from investment houses and insurance firms to advisers often comes out of your pot of cash anyway.

And if you cannot afford the fee, or simply do not want to pay it upfront, it can be added to the cost of your product or taken from the amount invested.

The Financial Services Authority (FSA) has today published final rules that it says will "remove commission bias" from the sale of products in two and a half years.

An FSA statement says: "Firms will not be able to accept commission in return for recommending specific products."

As that removes a major revenue stream for advisers, they will have to charge upfront fees to make ends meet.

The FSA's chief concern is that advisers are swayed in the recommendations they make based on the commission received.

Affected products

The commission ban applies to investment products (including choosing a pension to save in). It does not apply to mortgages, insurance policies or annuities (that give you a regular income during retirement).

However, the FSA is consulting with the industry whether to extend the commission ban to 'protection products' - life insurance, critical illness and private medical insurance policies.

Sheila Nicoll, from the FSA, says: "Today's new rules are designed to boost confidence and trust in the retail investment market by removing commission bias, actual or perceived, and exploding the myth that investment advice is free."

Adam Phillips, chairman of the Financial Services Consumer Panel, agrees with the FSA's stance.

He says: "At last, the distortion created by commission will be removed from investment advice. The FSA has stuck to its guns, and really has acted to protect consumers and improve the system. 

"Once the new rules are in place, independent advice will have to be truly independent, and not undermined by any commission paid by the product provider."

Banks to profit

However, critics fear the move could drive consumers away from getting genuine independent advice, due to the perceived higher cost, and into the hands of banks, which often only sell their own products, giving you little choice.

While banks do not charge upfront fees for sales advice, you often pay more through their higher charges.

Further reading/Key links

When to get advice: Financial Advice, Discount Brokers, Pensions, Annuities Guide