It says the FSA's proposed guidance is unclear and incomplete and could result in increased costs and less transparency for consumers.

There remains a lack of clarity on when commission can and cannot be paid for legacy business in certain circumstances, according to the IMA. It says, for example, that after 1 January 2013, if a consumer seeks advice on an existing investment and is advised to make no changes, can commission payments continue?

Also, the guidance needs to be clear as to which party is responsible for instructing commission to cease. Fund managers will not know whether or not advice has been given. They will be dependent on information provided by advisers, platforms or other distributors as to whether or not they should continue to pay commission.

An IMA spokesmand said: "The IMA has consistently urged the FSA to introduce a sunset clause, after which time all commission payments would cease. Otherwise there is a risk that consumers will be left in unsuitable investments indefinitely while advisers continue to receive commission.

"Furthermore, without a sunset clause there is a danger of market distortion due to differing treatment of investments within wrappers or held directly. Under current proposals, in a number of circumstances investments within a wrapper can change but commission will continue to be paid because the wrapper has not changed. In contrast, any change to a direct investment immediately ends commission payment. The IMA has concerns that this will encourage the sale of wrapped products, even where they are clearly not the best option for the client."

Andy Maysey, senior adviser, Retail Distribution at the IMA, added: "The FSA needs to do three things: provide practical examples of what is classed as legacy business to cover a number of common scenarios; make it clear where the responsibility lies to determine when commission can continue; and create a level playing- field across all products. To implement RDR effectively and in the interests of consumers, there should be no grey areas.

"Furthermore, we urge the FSA not to veer too far from its initial proposals as many firms have already invested considerable time and money preparing on the basis of the FSA's previous statements about the legacy book. Indeed, the FSA has been insisting for some time that firms should be well-advanced in their preparations. Any significant divergence from previous indications by the FSA about its approach will make implementation by 2013 unrealistic and add yet further costs."