Pressure for a shake-up of the financial advice industry has intensified after a wealth management firm was found guilty of mis-selling products to pocket more than £20,000 of commission.

A leading financial adviser has called on the Financial Services Authority (FSA) to scrap the existing commission structure when it publishes the results of its retail distribution review next week. The watchdog's review has been examining the industry's charging methods for the past two and a half years.

The Financial Ombudsman Service (FOS) upheld a complaint by Barry McClean, of Gerrards Cross, Buckinghamshire, that Zurich Independent Wealth Management wrongly advised him to switch from an Allied Dunbar income drawdown plan to a Norwich Union plan. It also concluded that the adviser wrongly recommended that Mr McClean should invest part of his money in a Clerical Medical investment bond when making a transfer to an open annuity with London & Colonial.

Dennis Hall, of Yellowtail Financial Planning, Mr McClean's new adviser, says that his client had more than £22,000 in unnecessary commission taken out of his fund. He says: “This is totally unacceptable and I am glad that the ombudsman is forcing Zurich Independent Wealth Management to put this right. This was a flagrant case of mis-selling by a commission-hungry salesman. The only way to stop this is to tear down the existing commission structure, which encourages such mis-selling. I hope that the retail distribution review will do just this.”

The ombudsman concluded: “I consider that the transfer to the Norwich Union income drawdown was incorrect on the basis that Zurich did not fully explore Mr McClean's objectives.”

The FOS has now ordered Zurich to cash in Mr McClean's investment bond, put the money into the London & Colonial open annuity and restore him to the position that he would have been in had the adviser not put him into the investment bond.

Mr McClean says: “I had wanted to pay for financial advice by fees rather than commission but was persuaded to opt for commission. However, I became increasingly disenchanted with this method of payment. I did not understand how much commission was being taken from my pension savings. It didn't really hit home until I saw the paperwork - and by then I had committed myself.

“I felt that my advisers were carrying out unnecessary transactions when they could have made things a lot simpler. Eventually, I decided enough was enough and went to the ombudsman.”

Mr Hall adds: “This case highlights the weakness in the current structure of financial advice. You can be called independent even if the product provider, rather than the client, is your paymaster. This confusion should be ended. The case also shows how the lure of commission can distort the provision of good advice. I think that only advisers who are fee-based can truly claim to be independent”

A spokeswoman for Zurich Independent Wealth Management says: “Clearly this is a complex matter. We have considered the documentation available to us and maintain that Mr McClean's investment objectives were met by the advice given. We can confirm that the required policy documentation was provided to Mr McClean. We understand that the Financial Ombudsman Service has upheld Mr McClean's complaint and we are co-operating fully with the decision. We appreciate that this is a difficult time for Mr McClean and are working as quickly as possible to resolve this matter.”

Gary Nolan and J.P. Loveland, the two advisers at the centre of the case, split the commission they received. Mr Nolan, of Zurich Independent Wealth Management - now known as Openwork Market Solutions - received 60 per cent, while Mr Loveland, who now works for Openwork, a separate multi-tied adviser in which Zurich has a 25 per cent stake, received 40 per cent. Mr Nolan and Mr Loveland were invited, through Zurich, to speak to Times Money but both declined.

The key questions to ask your adviser

Are you charging me fees or commission?

How much commission are you being paid, both upfront and annually, by the providers of each investment product that I hold?

How much of these payments is ultimately coming out of my pocket, initially and annually - and what is the total cost over five/ten years?

Are there any products on which you do not receive commission and have you ever recommended any of these products to me?

Are my investments being actively managed? If so, how?

Do you think that you have been successful in managing my money and how do you measure your success?