How do i take action against an ifa?

dunstonh

Part of the problem is that the fund house did not fully disclose all the assets that were held within the portfolio. That lack of disclosure was also part of the reasons why the small number of IFAs that recommended this fund shouldn't have. If you dont know where it invests you shouldnt invest in it. Even if the fund house tells you its cautious.

The IMA have said they have no plans to change it as the sector title is an indication only and that most sectors have funds that cover a range of risk profiles.

Rollinghome

dunstonh wrote: »

That lack of disclosure was also part of the reasons why the small number of IFAs that recommended this fund shouldn't have.

The interesting question would be whether their oversight was due to simple incompetence or whether earning a juicy 1% from the 2.3% AMC, double the average, exacerbated their myopia?

dunstonh

Rollinghome wrote: »

The interesting question would be whether their oversight was due to simple incompetence or whether earning a juicy 1% from the 2.3% AMC, double the average, exacerbated their myopia?

Seeing as so few actually recommended the fund and those that did mostly used platforms that have the same charge regardless, I doubt that was an issue.

I think the most likely reason they recommended it was because it was going up when everything else was going down and as it was marketed as low risk, they accepted that without doing their own research.

jack_spratt_2

Aegis while it's very loyal of you to constantly stick up for your industry, it would be nonsense to pretend that everything is fine as it is. After a hard-fought fight against change by many IFAs, the FSA is insisting on an end to current practices for good reasons.

People just cannot see that any increased regulation has to be paid for by someone and at the end of the day its going to be the investor .
Just as in any occupation you will get people who are good at there job and some who are not .
Any advisor is accountable for why he recommends a particular product

Rollinghome

jack_spratt wrote: »

People just cannot see that any increased regulation has to be paid for by someone and at the end of the day its going to be the investor .
Just as in any occupation you will get people who are good at there job and some who are not .
Any advisor is accountable for why he recommends a particular product

Sorry that's nonsense. Sounds like another protest from the trade. The problem is that too many IFAs are very good at selling and not very good at advising.

The the reason a potential investor purchases the services of an IFA is for unbiased advice. He doesn't pay him simply to be flogged products paying juicy commission.

If he can't be sure of obtaining advice that is unbiased because the IFA gets bunged commission from the product providers then he isn't getting what he thought he was paying for. He's been stuffed.

Now you may with a touching belief in human nature think that all IFAs are uninfluenced by backhanders but quite clearly the FSA doesn't agree; Arch Cru didn't agree or they wouldn't have offered double the normal trail commission to flog their dodgy product; Martin Lewis doesn't agree

The proof that commission impacts advice is that companies deliberately market increased commission rates to IFAs. If advice was never biased, then the rate of commission wouldn't make any difference, yet product providers know that up the commission rate and they're more frequently recommended. - Martin Lewis.

and Moneyweek www.moneyweek.com/personal-finance/need-unbiased-advice-youll-be-lucky.aspx and most financial journalists don't agree.

Simply put, if IFAs really could be relied upon to sell the best products regardless of whether commission was paid then there would be no point in the providers paying commission. They pay because they know that regardless of how good their product is commission-based IFAs won't willingly sell it unless they pay good rates of commission. Nothing complicated about that.

If the FSA gets it right the public should at last get what they pay for when the reforms are introduced in 2013. Obviously that won't be welcome with the old-time poorly qualified IFAs whose only real skills are for sales and we'll continue to hear their protests.

Those with real skills will continue to be in demand and will at last be able to call themselves professionals instead of salesmen.

opinions4u

Rollinghome wrote: »

Sorry that's nonsense. Sounds like another protest from the trade. The problem is that too many IFAs are very good at selling and not very good at advising.

Complaint statistics suggest that IFAs are a hell of a lot cleaner than the wider financial advice industry.

Now you may with a touching belief in human nature think that all IFAs are uninfluenced by backhanders but quite clearly the FSA doesn't agree

The FSA and its various predecessors have implemented numerous regulatory rules that basically say "get your documentation right and you can cover your backside" while overloading buyers with excessive paperwork that means little. The FSA have rarely improved consumer protection though.

Arch Cru didn't agree or they wouldn't have offered double the normal trail commission to flog their dodgy product; Martin Lewis doesn't agree and Moneyweek www.moneyweek.com/personal-finance/need-unbiased-advice-youll-be-lucky.aspx and most financial journalists don't agree.

Journalists would, of course, never write a story aimed at selling more newspapers or gaining more clicks on a web site, would they?

Simply put, if IFAs really could be relied upon to sell the best products regardless of whether commission was paid then there would be no point in the providers paying commission. They pay because they know that regardless of how good their product is commission-based IFAs won't willingly sell it unless they pay good rates of commission. Nothing complicated about that.

The difficulty you have, and it's always been a difficulty, is that people don't like to pay up front for advice. By going down a route of fee paying only advice you would effectively leave a huge percentage of the population choosing not to protect themselves appropriately. Quoting a "cost of advice" of several hundred pounds for a "free" face to face interview doesn't help the consumer. It confuses him.

If the FSA gets it right the public should at last get what they pay for when the reforms are introduced in 2013. Obviously that won't be welcome with the old-time poorly qualified IFAs whose only real skills are for sales and we'll continue to hear their protests.

Too many people currently buy overpriced and inflexible products directly from banks. The world would be a much better place if more people were guided / incentivised to see IFAs. Front-pricing these customers out of the market for independent advice isn't a good solution.

(by the way, I agree with much of your point. I would prefer the populus to be able to see the clear benefits of paying for advice and a complete removal of commissions from the industry. I just don't think implementing such a system would work and we would simply exclude many from the best possible advice and make it even easier for the banks to dominate the market in the design and distribution of investment and protection products).

Ultimately regulation does have a cost. That cost will always have to be met by the consumer either directly or indirectly. But I think history teaches us that there is absolutely a need for regulation. It needs to be customer centred, not onorous on seller or buyer, and fair. The FSA usually goes around 30 pages of excessive paperwork per sale beyond this.

jack_spratt_2

Rollinghome wrote: »

Sorry that's nonsense. Sounds like another protest from the trade. The problem is that too many IFAs are very good at selling and not very good at advising.

The the reason a potential investor purchases the services of an IFA is for unbiased advice. He doesn't pay him simply to be flogged products paying juicy commission.

If he can't be sure of obtaining advice that is unbiased because the IFA gets bunged commission from the product providers then he isn't getting what he thought he was paying for. He's been stuffed.

Now you may with a touching belief in human nature think that all IFAs are uninfluenced by backhanders but quite clearly the FSA doesn't agree; Arch Cru didn't agree or they wouldn't have offered double the normal trail commission to flog their dodgy product; Martin Lewis doesn't agree
and Moneyweek www.moneyweek.com/personal-finance/need-unbiased-advice-youll-be-lucky.aspx and most financial journalists don't agree.

Simply put, if IFAs really could be relied upon to sell the best products regardless of whether commission was paid then there would be no point in the providers paying commission. They pay because they know that regardless of how good their product is commission-based IFAs won't willingly sell it unless they pay good rates of commission. Nothing complicated about that.

If the FSA gets it right the public should at last get what they pay for when the reforms are introduced in 2013. Obviously that won't be welcome with the old-time poorly qualified IFAs whose only real skills are for sales and we'll continue to hear their protests.

Those with real skills will continue to be in demand and will at last be able to call themselves professionals instead of salesmen.

Some of your comments are I am sure based on a view from a 1980-1990 financial advice mindset

When you ask for advice from an IFA it will be based on his knowledge and his experience there are no guarantees that any financial advice will turn into a great investment but you stand a better chance of a investment product fitting in with your requirements .

At the end of the day regulation in most cases just makes sure that advisor's are accountable and that they cover there backs !! No advisor worth his salt would sacrifice there reputation ( which is built over years ) to gain a little extra commission

dunstonh

Sorry that's nonsense. Sounds like another protest from the trade.

30% of my income goes on things to do with regulation and compliance. That ignores time.

Regulation and compliance has gone over the top. There is more paperwork to do a £50pm regular contribution into an ISA than there is to do a £100,000 mortgage. That is illogical and counter productive.

The FSA is flawed in that it likes to micromanage insignificant things and ignore wholesale issues. For example, it spent years developing an initial disclosure document for all advisers to issue at the start or a meeting. It was around 15 pages. It was complete overkill. A couple of good points that were worth using but buried in too many pages. They then went on to withdraw that and allow firms to issue their own versions.

Regulation should be a good thing but for the last 10 years the focus, direction and management of the FSA has been wrong. Ideas come and go and the industry picks up the tab (and passes it to the consumer). The best thing to come out of the FSA in that period was the mortgage key features document. Cant think of anything else.

The problem is that too many IFAs are very good at selling and not very good at advising.

Stats dont back you up. FOS publish the figures every year and IFAs have tiny complaints stats. The FOS have said themselves that media perception is wrong when it comes to IFAs. Although the media are starting to come round as recent articles have shown that the perception of IFAs is one of only a few financial services roles that has improved through the financial crisis.

The the reason a potential investor purchases the services of an IFA is for unbiased advice. He doesn't pay him simply to be flogged products paying juicy commission.

Despite many reviews, the FSA has never found any widespread evidence of commission bias. NS&I, who pay no commission, get more introductions from IFAs than anyone else. They even have an micro-site to cater for IFAs. So, where is that juicy commission?

Arch Cru didn't agree or they wouldn't have offered double the normal trail commission to flog their dodgy product

Most Arch Cru investments were bought via Transact. Transact works to an RDR standard and rebates the trail commission.

Arch Cru published figures that showed only 1000 advisers recommended their funds. That's out of 30,000 IFAs. That's just 3% of IFAs. There were posts by DIY investors on this forum last year asking about buying it. Do you think they were doing so because of the trail?

Martin Lewis doesn't agree

Since when?

If the FSA gets it right the public should at last get what they pay for when the reforms are introduced in 2013. Obviously that won't be welcome with the old-time poorly qualified IFAs whose only real skills are for sales and we'll continue to hear their protests.

RDR is not going to make much difference to most IFAs. Indeed, most are going to be better off under it.

Those with real skills will continue to be in demand and will at last be able to call themselves professionals instead of salesmen.

Its a little pathetic that you continue to attack the most reliable distribution channel with unfounded information and biased opinion. Sure, things are not perfect but then nothing is. Yet you ignore the distribution channels that cause the problems

Rollinghome

Now there's a surprise Dunston! An IFA says things are just perfect as they are and the FSA shouldn't put a stop to a good thing. :rolleyes:

The current position is that IFAs need to know only a little about investment but a lot about selling. They are paid by the investment managers to sell their products.

The FSA wants to tilt the balance. It wants better education and investment knowlege and it requires those who want to describe themselves as "independent advisers" to be real advisers - not salesmen dependent on sales commission from the products they sell.

What's needed is not more regulation but a structure that supports unbiased advice instead of the current system that lacks credibility. The public need proper advisers not salesmen sugging as advisers. Not more regulation but regulation that works.

There was nearly quarter of a billion in just one of the six Cru Arch funds.

From http://www.citywire.co.uk/adviser/-/news/collective-investments/content.aspx?ID=350332
"Take the Arch Cru Investment Portfolio, the largest fund, which stood at around £215 million, before all six were suspended in March.

Investors faced a 6% initial charge on entry, with up to 4% payable to the adviser as commission and an annual management charge of 2.3% giving 1% trail to the adviser."

But sadly the advisers may not get their commission after all.

From http://www.citywire.co.uk/adviser/-/news/collective-investments/content.aspx?ID=348097&Page=1
"Cru’s bank accounts have been frozen... In the meantime Capita has been forced to stop making trail commission payments....

‘A number of IFAs have contacted me and are very concerned that Capita has not paid that revenue and the impact that has had on their businesses,’ said Ainscough."

dunstonh

Now there's a surprise Dunston! An IFA says things are just perfect as they are and the FSA shouldn't put a stop to a good thing.

Stop making things up. You just lose your credibility each time you do this.

Where did I say things were perfect?
Where did I say that FSA shouldn't change things?

What's needed is not more regulation but a structure that supports unbiased advice instead of the current system that lacks credibility. The public need proper advisers not salesmen sugging as advisers. Not more regulation but regulation that works.

Isn't that what we are saying? Focus on the areas that need improving and not on those that don't. i.e. focus on the tied sales reps as that is where the problem is on advised sales.

If IFAs account for under 3% of complaints at the FOS (a figure that has been improving year on year) and are improving in public perception, then surely its common sense to focus on the areas that are not?

But sadly the advisers may not get their commission after all.

As already mentioned, it wont necessarily be the advisers that lose out on that front but the consumers. The fee charge model that you like means the trail that was rebated will not be coming in and the charge taken from elsewhere.