IFA obligations under RDR

Rossinante

If an IFA that you have used before 1 Jan 2013 sells you a pension product without discussing his charges for that product (he just assumes that the previous initial charge plus trail commission is OK), is he in breach of regulations?

If so, what advice would you give regarding making a complaint to his company or the FCA?

mania112

Both pre and post RDR the IFA should have disclosed the fee for each piece of work they did for you, so yes.

First off is to complain to the IFA, he/she will have a strict process they must stick to (in terms of dealing with your complaint).

Then, if you're not happy with what they say, go here: https://www.financial-ombudsman.org.uk

dunstonh

If an IFA that you have used before 1 Jan 2013 sells you a pension product without discussing his charges for that product (he just assumes that the previous initial charge plus trail commission is OK), is he in breach of regulations?

Trail commission no longer exists on advice cases. It can still exist on execution only and non-advice cases. Assuming this is an advice case, the adviser should get you to sign a fee agreement on post RDR cases. The charges will also show on the personal illustration. So, that is two places you are notified. Have you received either of these?

I'm not sure how an IFA can actually proceed on advice basis without a fee agreement being signed.

If a fee agreement was signed pre RDR and it remains valid (i.e. no change to the charges) then that can continue to be used post RDR. So, as long as there is not a different charge being applied and the same existing one continues, that is fine.

If so, what advice would you give regarding making a complaint to his company or the FCA?

You cannot complain to the FCA. It does not handle consumer complaints. You cannot go direct to the FOS as they will only consider complaints after you have had a final response from the firm. IFAs generally take complaints personally and usually a complaint will end the business relationship. Mainly as you feel the IFA is doing something wrong but also the IFA may feel your complaint is invalid and they cant work with you going forward.

Before you go down the route of formal complaint, have you considered talking to the adviser? It may be that their charges havent changed post RDR and their existing agreements are still valid. To destroy a working relationship on what could be a misunderstanding seems a shame. (for example you mention trail commission but most pensions never paid trail commission).

Daniel_Elkington

You cannot complain to the FCA, but you could cite a breach of trust and get them to investigate his conduct. It won't help you, but would help stop him being dodgy - if you want to take it that far.

Like Dunstonh says - it is in the personalised illustration, which will be the get out clause.

An IFA really shouldn't be 'selling' any products, just their services. Interesting usage of terminology - what's wrong with the pension?

Rossinante

My thanks to mania112, dunstonh and Daniel Elkington for your prompt replies.

I have been using this IFA for a couple of years now. I have just checked and although I can find a sheet quoting his rates, I can find no copy of a signed fee agreement, neither can I recall signing one.

The post-RDR business is an advice case. In a recent email exchange he claims that since he had previously supplied his terms of business (when we first signed up with him) the regulations do not require him to do anything further.

Where can I find a copy of the regs so that I can check for myself?

The email exchange with him was prompted by the fact that the charges detailed by the provider in the paperwork supplied after the account was opened seemed much higher than I expected. I therefore queried the charges and asked for a detailed breakdown and specific examples based on a given set of performance figures. The replies I received were evasive and never attempted to address the specific questions I posed - it was like talking to a politician

Perversely, I do feel that I have gained further information about the product from this exchange that I was not informed about when the advice was being given, hence I feel that the full facts were not made clear to me.

So, the lack of detail about the product, the lack of discussion and agreement about his fees, and the evasive replies that I have received do not fill me with confidence about this IFA.

Am I just stuck with this product now?

Will raising a formal complaint with him actually achieve anything other than give him a hard time?

Does this appear like a case for the financial ombudsman?

Personally, I would like to settle this amicably with the IFA but I don't know whether he is the kind of person who can admit when he has made a mistake (if he has) and offer an olive branch.

I would value your further thoughts.