More lunacy from the FP industry

I recently became privy to an arrangement between a dealer group and a service provider that sent shivers down my spine, now this may be an isolated instance of this sort of behaviour but i think it says something about the state of our industry and really shows why the government wants to outlaw commisions and overrides. The scam/legitimate business arrangement works like this;

The product provider normally charges lets say $100 per for a product/service and presumably margins are quite tight so there is little or no slack available to pay referal fees/commisions through to advisers and the dealer group in question so to make it worth while the product provider has created an alternative price schedule especially for clients of the dealer group in question so instead of paying $100 the client pays lets say $150. The dealer group and the adviser then split the $50 premium between them! (the actual figures involved have been changed and i have deliberately not identified the providers in question)

Now I do understand that in some instances paying a referall fee may a legitimate product distribution method but i think the deliberate over inflation of the normal costs of the product is a form of misleading and deceptive conduct and advisers should be forced to inform their clients that they are paying over standard rates for the service/product in question. What do you think? It truly stuns me that arrangements like this even exist!