Financial Advisor Suing - Help!

nadnad

My sister and her husband bought a house two and a half years ago. They got their mortgage through a financial advisor and with it they got Life Insuance (from Friends Provident). After 2 years their mortgage offer and tie in with Life Insurance was up - they went back to their financial advisor who started to tell them that there "was new government regulations now which meant that he had to charge £300 for his services" whether or not my sister actually took the products he advised. This bewildered my sister and myself having never come across these government regulations and certainly never came across a financial advisor charging fees like that. My sister then went to another financial advisor and he set them up with a new mortgage and new life insurance - at a much cheaper rate than the Friends Provident insurance. As the two year tie in was up they didn't see a problem.

Six months after the Friends Provident Life insurance was cancelled the dodgy financial advisor wrote to my sister asking for £750 in "administration fees" because she had cancelled the policy. He also produced a document with my sisters and her husbands signatures on it stating that (in a very round about way) they had to stay with Friends Provident for 4 years otherwise he would charge the above amount. I'm aware that you should always read everything carefully before you sign but neither my sister or her husband remembered signing this piece of paper - the advisor never mentioned his own 4 year tie in and they never had a copy of this "contract". My sister received a run down of all they had talked about in the meeting and this 4 year tie in was not mentioned on that either.

Since then the financial advisor has contacted his solicitor and they have threatened my sister with court action. She has contacted Friends Provident as the "contract" she signed had their logo at the top - they said it was nothing to do with them. She has contacted the FSA and they told her to go through a complaint procedure or the Financial Ombundsman, which she started to do. She has also spoken to her new financial advisor who told her that the other one is known for doing things like this but that it is not the usual procedure, she has also contacted her own solicitor who has told her to basically ignore the problem for as long as she can because it is costing the financial advisor more in legal fees than its worth and he may just give up. Since getting this advice she is wondering whether she should continue with her complaint to the Financial Ombundsman as they will obviously be in contact with the Financial Advisor and may spur him on with the court business!

She is not denying that she may have signed the "contract" but she has found rules on FSA website stating that Financial Advisors have to act fairly and openly etc. this fee of £750 doesn't seem fair somehow - he received commision for both the mortgage and the insurance and nothing was ever reclaimed off from from either company when they cancelled the policy. And how could he possibly charge £750 for admin?

Any advice would be greatly appreciated (also can I just point out again that if he hadn't lied to her in the first place about "government regulations" then she would have stayed with him - that just shows what type of person he is!)

Also sorry for the drawn out description of events!

payless

Most " Friends Prov" life policies would have a partial commission reclaim if cancelled within 4 yrs (although f tied to FP this may be different)

I have seen a number of firms use this type of contract, I have seen them be upheld in court. Sorry if its not want you want to hear, and its possible that there may be technical issues / untruths told- which might help theoir cause

nadnad

Thanks for answering so quickly - I am desperate to get some good news for my sister - I was under the impression that financial advisors had to explain everything explicitly these days - this contract was never explained or even mentioned to my sister and she was never given a copy of it - even though she was sent a copy of everything else. As she said herself - if she knew about it she would have kept the Life Insurance on for another year and a half - as this would be cheaper than paying the advisor.

Would this type of contract come under the "Unfair Terms in Consumer Contracts Regulations 1999"?

nadnad

Just an update on this - my sister stuck to her guns. She did all the right things she formally complained, followed the steps recommended by the Ombudsman and at last the Financial Advisor backed off - she got word from the court that the action against her had been dropped. It just goes to show - do not let these people walk over you.