Scott Black, departing chief executive of dealer group Share, said insurers would need to consider how overrides worked in with the new regulatory regime. All advisers will have to work for a licensed financial advice provider. Many of the expected functions of a FAP, such as support for compliance and education, are currently provided by dealer groups.

And while dealer groups have indicated they will operate FAPs, they will not take on all members under that umbrella.

Black said insurers would need to consider whether FAPs should receive overrides for their support for insurance advisers.

Another option could be for dealer groups to continue to operate, and offer things such as education and compliance help, and for the FAPs to outsource to them.

Partners Life managing director Naomi Ballantyne said overrides were likely to come under pressure, regardless of whom they were paid to.

She said said overrides were part of the high upfront commission structure that the Financial Markets Authority has indicated it wants to see change.

But Ballantyne said a move away from overrides and high upfront commissions would lead to less independence in the market.

If the industry did not have the resources to provide those functions itself, it would need insurers to step in. Those insurers would then want to see business placed with them in return for their investment, she said.

Dean McDougall, of Newpark, was worried too many dealer groups relied too heavily on promoting override sharing with their members.

Many dealer groups now operate co-operative structures, in which overrides are shared among members.

McDougall said that was not sustainable.

if that model failed in 18 months, those advisers would be on their own just as they had to face new financial advice regulations. “It’s a short-term gain rather than a long-term one.”

Dealer groups’ costs would become higher in future, he said, as they took on more compliance requirements and covered things such as education for their members.

“If you’re giving away overrides, your revenue from running your business, I’m struggling to see how they can do that.”

Share operates a co-operative model, but charges members a fee. Black said even if the group stopped fees and continued to distribute overrides, it would be sustainable because of the revenue coming from books of business Share had bought over the past decade.

He said as overrides lifted, members' share price value increased but the fee they paid stayed the same.

Nicola Smee, of Solutions, said her group would survive if there were no overrides. "Everyone who is part of it are all brokers. We won't stress about that until it happens, if it happens."
Simon Fisher and Greg Barratt, of The Answers, were approached for comment.