IFA unethical behaviour

Stathan2012

Our stepmother died at the age of 87 last December, with a relatively large estate, having been inherited from our father who died in 2001. She was one of the first clients of a newly-formed IFA firm in 2004, and we believe that the IFA (Founder and Managing Partner) abused his position of trust and manipulated a position to benefit from the estate, and that he is probably following the same approach with other elderly clients. Under his guidance she amended her will in 2015 to make him an executor, and bequeath him £10k. In 2020, he resigned his position as Director of the operating company (while remaining a Director of the Holdings company). Nevertheless, all subsequent communications with him were written on company letterhead, such that our stepmother continued to believe to the day she died that he was acting as her IFA - he took no steps to disabuse her of this view. Immediately thereafter, he once more guided her to amend her will, increasing the bequeathment to him to £50k. He increasingly took over more control over our stepmother's financial affairs, ultimately taking complete management of all paperwork arriving at the house, and visiting (post-Covid) every two weeks. In the last three months of her life, he pressured to be granted Power of Attorney over her financial affairs (fortunately the family put sufficient doubt in her mind to postpone the decision), arranged a valuation of her house for probate purposes (while she still appeared to be in good health!), and was aggressively pushing for an additional £100k in the final rewriting of her will.

The IFA company was (and remains) FCA-accredited throughout this period, and the individual in question was also FCA-accredited until April 2021. I would like to discover whether any of the above specifically breaches FCA regulations, e.g. are accredited members eligible to be executors or beneficiaries to a client's will?

We would like to hear whether forum members have any similar experience, to establish whether abuse of trust is a growing issue in the IFA sector, taking advantage of long term relationships with aging, vulnerable clients? If so, is legislation needed to curb such behaviour?

Hoenir

There's bad people in every walk of life.  Always has been always will be.  Generally not mainstream newsworthy so you don't hear about them. 

Pat38493

Do you have evidence that this person was pressuring or coercing your mother into leaving money in her will? If so this may well be a crime in itself regardless of his FCA status.  At the least it could allow you to challenge the will and the executor status.  If he was pressuring her to increase the bequeathal to himself whilst knowing that he was already the executor this sounds pretty dodgy to me.

If any of these actions were done while he was operating as a regulated individual, there would be more to answer for on that aspect as well - from your description it does not sound like he was operating in his client’s best interests.  There are actual IFAs who sometimes post  on this board who might be able to clarify the FCA regulations if the person gave advice earlier but then quit as an IFA, but continued to persuade an ex-client to take actions.

I am assuming in these comments there there is not hidden information (e.g. this person was a friend of your mother for many years prior to becoming an IFA or suchlike) - that could make it more complicated to prove.

dunstonh

 Nevertheless, all subsequent communications with him were written on company letterhead, such that our stepmother continued to believe to the day she died that he was acting as her IFA - he took no steps to disabuse her of this view.

He may have dropped his directorship on the trading firm, but it doesn't mean he stopped working for the trading firm.    It's very common for older advisers to reduce their responsibilities and take on lesser roles as they wind down.   In many cases, advisers will have a relationship with the client going back decades and will retain the point of contact for day-to-day things whilst a regulated adviser will oversee and take responsibility for any advice events.

I have several that work for me on that basis, and despite the clients being told and knowing that I am the adviser, they still refer to their long-term ex-adviser as their adviser.  The client knows they are not but it reflects the historic relationship.   

So, this particular point would not concern me as long as he was working for the firm with their knowledge and in accordance with his duties with the firm. 
.

The IFA company was (and remains) FCA-accredited throughout this period, and the individual in question was also FCA-accredited until April 2021. I would like to discover whether any of the above specifically breaches FCA regulations, e.g. are accredited members eligible to be executors or beneficiaries to a client's will?

They would be authorised and regulated by the FCA.   It is not an accreditation.  However, the adviser does need to be accredited to maintain authorisation.

It is allowed but comes with caveats:
1 - Advisers require regulatory permissions to hold client money.  The vast majority do not.  Being an executor of an estate as a professional adviser to a client requires the authorisation to hold the client's money.   If that permission is not held, then it would be a breach.  Similarly if the adviser is named as POA
2 - The majority of compliance firms will recommend that advisers do not hold any position that can create a conflict of interest.  i.e. don't name the adviser as executor or POA.  
3 - being a beneficiary to an estate of a client is not a breach.

We would like to hear whether forum members have any similar experience, to establish whether abuse of trust is a growing issue in the IFA sector, taking advantage of long term relationships with aging, vulnerable clients? If so, is legislation needed to curb such behaviour?

I have never heard of something like that in the modern era.     Back in pre-regulation days, I have heard of people retaining headed paper and acting as if they were still with a firm.  There were some prosecutions back then for fraud.   Not against the firm as they were victims too but the individual.  It was things like that which led to regulation but it was still very rare.   You rarely see things like this in the financial press.

There is clearly a conflict of interest, but conflicts of interest are allowed and required to be documented and mitigated.     There is already sufficient legislation and regulation.

I assume you complained to the advice firm?  - what was their response?
If you didn't like the response from the advice firm, did you take it to the FOS - what did they say?

Marcon

Stathan2012 said:

Our stepmother died at the age of 87 last December, with a relatively large estate, having been inherited from our father who died in 2001. She was one of the first clients of a newly-formed IFA firm in 2004, and we believe that the IFA (Founder and Managing Partner) abused his position of trust and manipulated a position to benefit from the estate, and that he is probably following the same approach with other elderly clients. Under his guidance she amended her will in 2015 to make him an executor, and bequeath him £10k. In 2020, he resigned his position as Director of the operating company (while remaining a Director of the Holdings company). Nevertheless, all subsequent communications with him were written on company letterhead, such that our stepmother continued to believe to the day she died that he was acting as her IFA - he took no steps to disabuse her of this view. Immediately thereafter, he once more guided her to amend her will, increasing the bequeathment to him to £50k. He increasingly took over more control over our stepmother's financial affairs, ultimately taking complete management of all paperwork arriving at the house, and visiting (post-Covid) every two weeks. In the last three months of her life, he pressured to be granted Power of Attorney over her financial affairs (fortunately the family put sufficient doubt in her mind to postpone the decision), arranged a valuation of her house for probate purposes (while she still appeared to be in good health!), and was aggressively pushing for an additional £100k in the final rewriting of her will.

The IFA company was (and remains) FCA-accredited throughout this period, and the individual in question was also FCA-accredited until April 2021. I would like to discover whether any of the above specifically breaches FCA regulations, e.g. are accredited members eligible to be executors or beneficiaries to a client's will?

We would like to hear whether forum members have any similar experience, to establish whether abuse of trust is a growing issue in the IFA sector, taking advantage of long term relationships with aging, vulnerable clients? If so, is legislation needed to curb such behaviour?

The forum is a small self-selected bunch of users, so you aren't likely to get anything like a realistic sample, let alone enough to 'establish' any sort of trend.

If you have concerns, then a formal complaint is the way forward.

Keep_pedalling

You are making a lot of assumptions here, you were not present when the will was drafted (presumably with a solicitor) or when she had her meetings with the FA, so you have zero evidence of coercion, and challenging the will is going to be difficult and potentially very expensive. £50k sounds a lot and it indeed is if her estate is £100k but would only be a minor bequest if it is £1M.

People do form personal relationships with people they have had long term professional associations with be that a FA, accountant or hairdresser and it is not unusual for them to leave something in their will. 

Who are the other executors?

PS. This has nothing to do with pensions so I have reported the thread and hopefully a mod will move it to the appropriate forum.