IFA fined 1.1m for annuity/drawdown/transfers misselling

EdInvestor · 11 November 2008 at 6:23PM

Chase de Vere advisors "may" face disciplinary action..

http://www.citywire.co.uk/adviser/-/news/regulation-training-and-competence/content.aspx?ID=320636&re=4132&ea=156896

5 years ago this IFA company was fine 165,000 for misselling precipice bonds.

But still it goes on....

Is it any wonder investors are dubious about seeking "advice"?

Lokolo · 11 November 2008 at 6:28PM

Ha.

Would be better to go for self investments! Then all losses are down to yourself!

btw are you an IFA?? Just you don't have it in signature, and I know dunstonh has pawn IFAs in his office so has his little signature thing.

dunstonh · 11 November 2008 at 6:35PM

Ed isnt an IFA. She wouldnt post a number of the things if she was.

In this case, it is believed that they CDV advisers over recommended SIPPs to people. Funnily enough that is often what posters here are told to use by non-advisers. Ed included. At least those mis-sold by CDV are going to get redress. What about those who acted on forum posts from here?

Is it any wonder investors are dubious about seeking "advice"?

IFAs account for just 4% of complaints at the FOS and over 80% of advisers have never had a complaint. Anyone who has been mis-sold by CDV is getting the correct consumer protection. So, the system is working in this case. Given the choice, its better to be mis-sold and get redress than act on misinformation here and get nothing.

Lokolo · 11 November 2008 at 6:38PM

Now I know I don't know much about pensions.. but with SIPPS can't you easily go to an IFA for a portfolio? I can't see there being much difference between that and a company pension say (as I did say, I don't know much about pensions so I could be going off on a limb here...).

dunstonh · 11 November 2008 at 6:42PM

You can do DIY or use an IFA with a SIPP. The difference is that you can balls it up as much as you like DIY with no come back. However, an IFA has to make sure its best advice. More often than not, use of a SIPP is not best advice. Stakeholders and personal pensions (particulary modern personal pensions) are cheaper. Occupational pensions, if defined benefit, are significantly better and much much harder to justify moving out to a SIPP (not impossible just statistically harder to justify).

So, the IFA would be expected under rule RU64 to give a fair and valid reason for not using stakeholder and would be expected to discount a PPP before choosing a SIPP.

Also, the FSA has been giving warnings for some years now about the over use of SIPPs and that people with small funds should not be doing income drawdown (something else certain people in this forum tell people to do regularly). I and the other IFAs on the board have said the same many times in the past.

If you choose to ignore these warnings (either an adviser or consumer) then you deserve the outcome. In the case of an adviser, its a fine and redress to be paid and possible further action (loss of licence etc)

Lokolo · 11 November 2008 at 6:45PM

Oh right, so you go to IFA and they will recommend the stakeholder or whatever? I always thought IFAs would only help with SIPPs... obviously not true (I did assume that though). I thought things like Company Pension would have their own stakeholder so you could either choose that route or the SIPP route... obviously got that bit wrong...

Awesome, thanks!

EdInvestor · 11 November 2008 at 7:00PM

The types of SIPP that I recommend ( low cost, online, with discounts and rebated commission) are not the same kind as the high commission, high charge ones favoured by many IFAs. The article does not however mention SIPPs.

It is very worrying that all the misselling relates to retirement products.If there is any time of your life when you really need honest and skilled advice, it's when you retire, because if problems later occur, it is much more difficult to fix them.

These misselling cases are all in the area where people are least able to get good information on costs, charges and reduced risk investment options ( that is qhy they have to come to places like MSE for help).

The lack of proper information about annuities is a scandal, as is the failure of the regulator to require insurers to give full information about guarantees attached to pension plans - the IFA is supposed to do this, but the insurer should be forced to do it too as many don;t use IFAs, and IFAs will ignore the guarantees so as to missell (Equitable Life was an outstanding example of this).

The entire retirement area is heavily overdue for reform in terms of information and protection IMHO. This is the area where the Government should focus when providing extra financial help for advice.

dunstonh · 11 November 2008 at 7:38PM

The types of SIPP that I recommend ( low cost, online, with discounts and rebated commission) are not the same kind as the high commission, high charge ones favoured by many IFAs. The article does not however mention SIPPs.

The types of SIPPs are the same. There is actually very little cost difference between a SIPP arranged by an IFA and DIY.

If you compare like for like distribution channels, stakeholders and personal pensions can come in at 1/3 to 1/2 of the cost of SIPPs. It doesnt matter if you use an IFA or go DIY.

These misselling cases are all in the area where people are least able to get good information on costs, charges and reduced risk investment options ( that is qhy they have to come to places like MSE for help).

They come to MSE and get told to do a SIPP. The very product that is over used, warned about and has resulted in recent fines and action by the FSA.

This is the area where the Government should focus when providing extra financial help for advice.

The Govt doesnt need to step in at all. Indeed, they could do with taking a step back. Pension simpliciation was nothing of the sort. It just created more work and knowledge requirement. It should have been simplified even more.

As for the Govt giving advice. No way. They tried it with flow charts in the recent past and found that in 1/3rd of cases, they resulted in the incorrect advice. They were only suitable for basic advice and were too generic.

EdInvestor · 11 November 2008 at 8:18PM

dunstonh wrote: »

The types of SIPPs are the same. There is actually very little cost difference between a SIPP arranged by an IFA and DIY.

Not so.There's a big difference between the online low cost DIY SIPPs with no annual fee and those offered by the insurance companies/IFAs.

Investors Chronicle article explaining the range of SIPPs

dunstonh · 11 November 2008 at 9:56PM

Not so.There's a big difference between the online low cost DIY SIPPs with no annual fee and those offered by the insurance companies/IFAs.

What about the online SIPPs with annual fees and the IFA offered SIPPs with no annual fees. You cannot just pick the best from one distribution channel and compare it with average on another. Try like for like.

whiteflag_3 · 11 November 2008 at 10:44PM

If there is any time of your life when you really need honest and skilled advice, it's when you retire, because if problems later occur, it is much more difficult to fix them.

An all time classic from Edinvestor!

So Ed, that being the case why have you used this forum for the last 2 or 3 years to actively encourage posters with no knowledge of either pensions or investments to go the DIY route rather than, as you are now suggesting seek "honest and skilled advice" ?

IFA fined 1.1m for annuity/drawdown/transfers misselling

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