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FA week in words (3 August)

“This is a vulnerable client who the bank repeatedly disobeyed instructions in order to sell products.”

By Marc Shoffman | Published Aug 03, 2012 | comments

That was the warning from David Penny, managing director of Somerset-based Invest Southwest, who accused Lloyds TSB of using “wild west tactics” on a vulnerable client to keep him from transferring money out of his accounts,

Mr Penny claimed his client was first told by Lloyds TSB he had to go into the branch to speak to a financial consultant to discuss the money in his account.

After he saw the consultant, the client went to Mr Penny for advice.

Mr Penny said: “He felt obliged to go to the bank. He was made to feel that there was no choice.

“As an IFA, and the fact this man was the friend of one of my clients, I helped him put together the correct advice for a high level of income, taking into account his inexperience as an investor.”

However, Mr Penny claimed his client then received a number of calls from a Lloyds adviser asking him to come in to sign up to the bank’s advice.

When he declined, Mr Penny claimed the adviser turned up on the client’s doorstep to encourage him to do so.

Networks

IFAs who breach network rules should be kicked out immediately or held personally responsible if they have not complied, Rosemary Heaversedge has said.

Ms Heaversedge, principal for Shropshire Independent Financial Services, said as a network member she was concerned that advisers who recommend unsuitable products that go belly-up, are not kicked out straight away, posing potential problems for professional indemnity renewal.

She said being “dealt with robustly” was not enough, because if a network pays out a compensation claim for an IFA who mis-sells a product, the other network members are the ones who end up paying for the mistake.

This results in higher and unaffordable PI premiums, which could lead to insolvency of the network.

Failed network Honister Capital went into administration in early July because it could not pay its PI insurance.

Ms Heaversedge, who is a Sesame member, said: “If networks don’t get rid of people, it puts everyone else’s livelihoods at risk. All of us network IFAs are watching Honister unravel with some apprehension because clearly we could suddenly find ourselves in the same position. Compliance is exceedingly strict, providing IFAs don’t lie, so what networks must do is get rid of rogue IFAs more quickly.”

IFAs have bemoaned the lack of skilled staff in the industry after finding difficulties in recruiting high-quality employees ahead of the retail distribution review implementation date.

Regulation

Hector Sants, former chief executive of the FSA, was sent on his way by ex-colleagues with a small event held at the regulator’s offices, a Freedom of Information Act request has found.

In the FSA’s response to the FOIA, the leaving reception for Mr Sants was held at the FSA’s staff restaurant on 20th June, with a total cost of £2580.

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