The Financial Conduct Authority (FCA) is looking at whether it is possible to turn off all trail commission paid to advisers from legacy products.
Although the retail distribution review (RDR) banned the payment of trail commission on new products when it came into force at the end of 2012, if a client invested in a fund before that deadline advisers can still receive trail commission.
The interim report found that the 21 asset management firms surveyed paid £1.4 billion in commission in 2014.
In a consultation paper published alongside its asset management study the FCA said it was looking at whether it was possible to 'switch off' trail commission for legacy products.
The regulator said the interim report of its asset management study found that some people were paying more to invest because they were in pre-RDR products.
'Some respondents to the interim report strongly recommended us to consider introducing a "phased sunset clause" on paying trail commission to financial advisers,' it said.
The FCA said some of the responses said advisers should not be given 'indefinite' commission payments, particularly when the advice was given at the start of the investment and was not ongoing.
Asset managers told the FCA that although there was no barrier to stopping all legacy trail commission, they feared advisers would not recommend their funds any more if they did so.
The regulator also said it has previously had concerns that banning trail commission would impact all small advice firms, but it now wanted to examine whether this was actually the case.
'However, we are not clear on the extent to which smaller advice firms receive trail commissions. Some industry sources suggest that the firms charging pre-RDR fee levels are still most commonly life insurance companies and banks,' it said.
The FCA has therefore asked advisers about the impact of banning all trail commission over a period of time. It added it would look at legacy trail commission paid on personal pension and life insurance products as well.
You can read the full consultation, including details on how to respond, here.