How not to get an IFA to sign the forms

Simple_Man

I'm posting this in case it is of help to consumers, it is not intended as a potshot at the IFA, who refunded the fee anyway. I am in the same boat as the consumer referred to and still stuggling to comply with the Act.

Finding an IFA who will sell statutory advice (as per the Pension scheme act 2015 section 48) AND agree to sign the magic forms continues to be a challenge. I read a case on the FOS site where a client tried to get the IFA to agree to such a deal up front only to find he changed his mind half way through. Although the advice fee was refunded, which is good, the case ended up with the ombudsman. Two things stuck out in the decision, for me

1. The FOS weren't that bothered about the possible breach of contract (if indeed there was legally one)
2. The FOS relied on a lack of specific commitment to sign the forms REGARDLESS of agreement on the advice.

Key email exchange:

Mr D said he would send details of the schemes to the adviser once it had been confirmed
‘...that the report you generate in return for the £750 fixed fee would constitute the financial
advice that I would need from a regulatory point of view in order for me to legitimately
request a transfer of those funds into (for example) my existing SIPP.’

75point3’s adviser confirmed that ‘it will cover me signing three forms to say that we’ve
advised you. I will need to complete a risk profiler, to provide details of the receiving scheme
and a summary of your wider finances…The report I send will refer to these items and you
will then understand why I need them.’

Reading the FOS remarks it sounds to me like they have redefined the Pension Scheme Act, since the PSA says nothing about approval or agreement, just the giving of advice.

FOS:
I am not persuaded that 75point3 agreed that if it concluded it could not endorse the transfers that it
would anyway allow such a report to be used in the way Mr D suggests.

Surely the same objections can be applied to the adviser as the FOS applied to the client? '[the fee] will cover me signing three forms to say that we've advised you'. No caveats there either? (I know we don't have sight of the full emails but I presume the report would have shared such with us if there was one).

So the takeaway message could be, if you want to try your luck at tying down an IFA at the start, you will have to be even more explicit.

I'm not allowed to post the URL to the decision but the firm is 75point3 ltd and its the only entry for them on the FOS Decisions site. Perhaps if appropriate someone could add the url?

dunstonh

http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=158560


They say:

This presents a risk that you could be worse off by
transferring in the long run and I think that we could be liable for this. I

This is something that has been repeated a number of times on threads on this site.

1. The FOS weren't that bothered about the possible breach of contract (if indeed there was legally one)

There does not appear to be any breach of contract. The ability to withdraw is an option open to both sides. Plus, regulatory matters trump contract.

2. The FOS relied on a lack of specific commitment to sign the forms REGARDLESS of agreement on the advice.

The reasons the FOS gave seem fair and reasonable.

Often you have to read between the lines with published FOS decisions. This reads as if Mr D didnt want the advice but had to have it and wasnt co-operating with requests for information and when he eventually decided to give, then adviser had lost all confidence in him and withdrew their service. It indicates a break down between the adviser and potential client.

It chose not to treat him as an insistent client if he still wanted to proceed with the transfers. That was an entirely legitimate exercise of its commercial judgement.

Someone else was saying the other day on here that they were going to go fo the FOS because their adviser wouldn't do it. They may want to read this decision by the FOS.

Brynsam

Worth reading carefully....

Simple_Man

dunstonh, thanks for posting the direct link for me.

As I said I have nothing particularly against the IFA other than thinking they were foolish to make the apparent commitment they did in the email exchange. You are right, this ruling raises the bar for consumers hoping to access their pension pot come what (advice) may.

However, the harder the good guys in the business make it, the more likely it is that people like me will get frustrated/impatient and go to the bad guys. Sorry if I'm flogging a dead horse here.

sandsy

There is something on this in the regulators new consultation on pension transfers:

5.10 We also consider that it is appropriate to provide an advice confirmation in the case of both positive and negative recommendations. We have proposed modifications to the existing Handbook guidance to reflect this.

See: https://www.fca.org.uk/publication/consultation/cp18-07.pdf

It might help others in future if it goes ahead.

bowlhead99

sandsy wrote: »

There is something on this in the regulators new consultation on pension transfers:

5.10 We also consider that it is appropriate to provide an advice confirmation in the case of both positive and negative recommendations. We have proposed modifications to the existing Handbook guidance to reflect this.

See: https://www.fca.org.uk/publication/consultation/cp18-07.pdf

It might help others in future if it goes ahead.

Yes, the change to COBS proposed to be effective October 2018 is IMHO welcome:

The statutory advice requirement
19.1.10 G
(1) Where a firm has advised a retail client in relation to a pension transfer or pension conversion and the firm is asked to confirm this for the purposes of section 48 of the Pension Schemes Act 2015, then the firm should provide such confirmation as soon as reasonably practicable.
(2) The firm should provide the confirmation regardless of whether it advised the client to proceed with a pension transfer or pension conversion or not.

Part 2 is new.

My reading of it is that under that regime, the adviser *should* be covered because he is simply providing a confirmation that he provided advice in relation to a proposed transfer - he's following rules in line with the regulatory requirement to confirm he carried out that piece of work (advising on the pension transfer, whether or not the customer is advised that it's good or it's stupid).

At the moment, a pension company won't accept you have had advice about whether the transfer is good for you or not, when you show them the invoice for the advice. You have to effectively get a letter confirming that yes, you did get the advice and the invoice you're waving in their face really does mean you got advice on that transfer and it wasn't for something completely unrelated.

Advisers are currently reluctant to do the confirms as in doing so, they would be providing written documentation which basically facilities a transfer that he doesn't recommend. Understandably advisers do not currently want to take on the risk that by writing a letter - which is used to process a stupid pension transfer- he has facilitated a stupid pension transfer that nobody in their right mind agreed with. Because facilitating a stupid transfer could come back to haunt him.

Under the current guidance where the customer buys advice and the adviser would rather wash his hands of it than get implicated in facilitating a stupid transfer, the adviser might just 'down tools' rather than formally providing the advice and a receipt/confirmation for that advice. That's not a welcome outcome for anyone. The insistent customer doesn't get the document he wants, and the adviser feels he's 'dodged a bullet' by not writing the document, and might end up giving up a deserved fee for work done, just to get rid of the customer.

But if later this year we go from a situation where COBS does not explicitly tell advisers that they must provide confirmation of the advice, to a situation where COBS says they should provide confirmation of the advice whether positive or negative, that surely is the safety net the advisor needs to be able to write the highly-demanded document.

"Why did you give that confirmation which indirectly facilitated the customer destroying his own wealth?";

"Well:
- I had sold the customer the service of evaluating his proposed transfer and recommending a course of action.
- The course of action I recommended was to stay with the great benefits of the existing pension, otherwise the customer risked destroying his wealth by being an idiot.
- I did not want to facilitate the transfer by confirming I had advised the customer, because the customer would be an idiot and would take my confirmation as proof he is a well informed customer, when between you and me he is an idiot who doesn't understand why I am vehemently opposed to the transfer.
- However, mindful of the explicit guidance in the Conduct of Business Sourcebook, I understand I am conducting business correctly in line with the regulator's wishes by confirming that yes, I gave this customer advice so he could understand why the transfer was a bad thing.
- I have done my duty to attempt to dissuade the customer from transferring but it is an undeniable fact that I gave him the advice not to transfer.
- So, unlike what I would have done before the FCA's most recent clarification in their sourcebook, I am not going to be a dickaboutit and refuse to confirm he came to me for advice and I examined the facts and told him what I thought. He did come to me for advice and I examined the facts and told him what I thought.
- I did not want to get involved with helping him further as an insistent client against my advice, so I didn't sell him any transaction processing services. I equipped him for life on his own with a report saying he should not go ahead, (and a letter saying I had given him advice, which is true) and set him loose on the streets.
- He is better off for having received my advice than if he had not received it. But of course he might still choose to be an idiot, because some people just make dumb life choices and it is futile to try to protect them from themselves.

Malthusian

Adviser: I have decided I don't want to proceed with this business, because I think you are a complaint waiting to happen.

Client: How very dare you. I'm going to complain to the FOS.

Adviser:

Malthusian

COBS 19.1.10 (2) will change very little. Many IFAs will still refuse to provide any kind of recommendation (and the piece of paper saying they have done so) if they don't think the advice is going to be positive, because they still don't want to be liable for allowing the client to destroy their wealth.

The only thing it will change is to make it explicit that if the IFA has gone to the extent of providing a recommendation - and presumably been paid to do so - they should provide the letter confirming they gave advice. Which is quite right. If the adviser has charged them for providing a recommendation but refuses to sign the confirmation that they have, that's not on.

But this still changes little as if someone had been given a recommendation but the IFA refused to sign the letter saying they had, and they complained, I would expect them to win a case at the FOS. In Mr D's case, he had never been provided with a recommendation, which is the crucial point.

£750 is dirt cheap for providing a full recommendation on whether to transfer three (three!) defined benefit plans, positive or not. I don't know what the adviser was thinking from the start but it sounds like they thought better of it.

Simple_Man

sandsy wrote: »

There is something on this in the regulators new consultation on pension transfers:

5.10 We also consider that it is appropriate to provide an advice confirmation in the case of both positive and negative recommendations. We have proposed modifications to the existing Handbook guidance to reflect this.

See: [not allowed to repost the link...]

It might help others in future if it goes ahead.

Now that is encouraging news. I would hope that makes IFAs more confident they can sell their advice on transfers as well as sign the forms with the FCA handbook behind them.

Simple_Man

Malthusian wrote: »

£750 is dirt cheap for providing a full recommendation on whether to transfer three (three!) defined benefit plans, positive or not. I don't know what the adviser was thinking from the start but it sounds like they thought better of it.

Indeed, just the other day an IFA quoted me £10,000 for transfer advice on the basis that 'these sort of things tend to be complex'. And I hadn't even got to mentioning the forms...