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I paid 2% of a transfer value of £127k last year. The payment was only due on transfer, and was taken out of the transfer pot (given my income that year was only £3k there was no way it was being paid in cash).
We had already discussed that they didn't do insistent client - which was fine by me - and there would have been no charge had they thought they couldn't recommend a transfer.0 -
I paid 2% of a transfer value of £127k last year. The payment was only due on transfer, and was taken out of the transfer pot (given my income that year was only £3k there was no way it was being paid in cash).
We had already discussed that they didn't do insistent client - which was fine by me - and there would have been no charge had they thought they couldn't recommend a transfer.
You don't feel that might have encouraged them to find reasons to recommend a transfer?0 -
There is a conflict in the FCA guidelines. On the one hand it allows clients to go against advice under the insistent client rules. On the other it says advisers should not transact where they know it to be bad advice.
I don't see this contradictory. The FCA Guidelines allow clients to go against advice, but says advisers should not transact where they know it to be bad advice.
This leaves the clients with the advice that they are told they must obtain, no advisor to help them go against the advice. This seems logical, albeit that it forces the client down the DIY route; it is their money after all.The comments I post are my personal opinion. While I try to check everything is correct before posting, I can and do make mistakes, so always try to check official information sources before relying on my posts.0 -
A local firm near us took on a new client from another firm. That person was heavily invested in a high risk non-mainstream property fund. The new adviser kept telling him to get out. The client refused the returns were good. The fund collapsed. The client complained to the new adviser who rejected the complaint as they had been trying to get him out of it for ages and they were not the adviser that recommended it. He went to the FOS and the FOS upheld the complaint because although it could see the audit trail telling the person to get out of the fund and why they should get it, they didnt feel the adviser was forceful enough.
This is what advisers are up against.
Thank you for this example. This does appear to be unfair action by the FOS. I expect that the regulations and guidance available to advisors would not lead them to conclude that this FOS decision was likely. The advisors appear to have been poorly served by the FOS.
Given this decision, the only safe action, if a client will not act on advice you have given, is to sack the client.
I wonder if the FOS realise the consquences of this decision? The conseqence seems to be that if an IFA completes a annual review and updates their advice, the client now has to take it, or be sacked. Doesn't this just lead to the IFA providing a 'discretionary' management service with the client being left to sanction the changes or walk?
Personally, I would prefer a situation where the client is not forced to act on the advice given and advisors are not liable for the outcome if the client does not act on the advice. The FOS appear to have a different approach in mind.The comments I post are my personal opinion. While I try to check everything is correct before posting, I can and do make mistakes, so always try to check official information sources before relying on my posts.0 -
I wonder if the FOS realise the consquences of this decision?
As the decision was not escalated to grown-up level (ombudsman), and therefore was not published, and no-one has heard of it outside anecdotal second-hand chats in the pub or third-hand chats on anonymous internet forums, the consequences of the decision are that the client got some free money from his IFA's network.
If you have advised a client to get out of their unregulated investment while they can, and given that advice the emphasis it deserves with words like "in the strongest possible terms" in bold and underlining, and kept a copy of that letter or email, and you are prepared to go to Ombudsman level in the very rare case that a complaint goes against you (most IFAs get less than one complaint per year, and those complaints have among the lowest uphold rates in the industry), then there is no reason to think you are not safe.
There should be no reason to sack the client and leave them all alone when the investment eventually does go bust.
The fundamental problem is that DunstonH's friend was an employee of a network and it was not his moral stand to make. The network had ultimate liability and it was their decision to pay up.
What the FCA and the FOS does not want is a return to the "execution only" scam where the adviser hands the client a letter saying "I advise you not to do this" but gives the client a nudge and a wink and says "This is just some legal crap I have to give you, obviously you should go ahead and cash in your final salary scheme". Then when it goes tits-up and the client complains, the adviser says "But I advised you not do it." (In the previous incarnation of this fiddle, the adviser would have said "But you signed a letter confirming you hadn't taken advice and were making your own decision.")Personally, I would prefer a situation where the client is not forced to act on the advice given and advisors are not liable for the outcome if the client does not act on the advice. The FOS appear to have a different approach in mind.
The starting assumption is that if you help the client do it and take money off them for helping them do it then you are liable. That's the job.0 -
You don't feel that might have encouraged them to find reasons to recommend a transfer?
Only if WillowCat went to one of those bucket shops that churns out defined benefit transfers by the hundreds and depends on defined benefit transfers for survival.
Many established, reputable IFAs do very few defined benefit transfers and will start by looking for any reason to recommend against a transfer, due to the liability, likelihood of being targeted by ambulance-chasing CMCs and higher professional indemnity insurance costs. A measly £3k is not going to make enough difference to their business to make them recommend an unsuitable high-risk transfer.
"Contingent charging" may be politically non-U but is still common practice because clients don't like forking out hundreds or thousands of pounds for being told to do nothing.0 -
I gave that adviser a call and asked him. Basically, as they had taken on the servicing rights of the policy and were collecting an adviser charge, they took on responsibility for the advice going forward.
The discussions over coming out of the fund were done via email. The FOS didnt feel that there was enough emphasis on how high a risk the person was taking and that a report should have been written showing the advice the adviser would give as the alternative and then show it being overruled via the client on an insistent client basis. So, although the words were said, they didnt give any impression of urgency or importance. Apparently, the reference was just very high risk but no context on what that risk meant and the adviser accepted first rejection by the client without questioning it more.
Still a harsh decision but perhaps a bit more understandable as an adviser is meant to be there to protect the client from themselves. Yes, a line has to be drawn somewhere but the adviser should have scared the hell out of the client and he didnt.
Apparently, he hasn't been billed yet as although the complaint was upheld, the client also made a complaint to the original seller who has since ceased trading and its now with the FSCS. The outcome on that will decide how much he has to pay, if any.
As Happyharry says, this is just what I am being told by that adviser. As he was a network adviser, he doesnt actually see what the FOS said. He just gets the network summary of it. So, I am hearing the story a few times removed.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
That makes more sense. I agree entirely with your line of thinking - "the adviser should have scared the hell out of the client and he didnt" - and the adviser was also clearly responsible for the investments if he was collecting an ongoing fee on them. Harsh but a harsh lesson learned.
HappyHarry hasn't commented on this as far as I can see - maybe you were thinking of one of my posts.0 -
I don't think it was me.I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.0
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