Where is the TCF line?

Tenet told FTAdviser that the regulator, at its smarter disclosure roundtable, gave a ‘thumbs up’ to live chat and videos explaining how products work but warned customer understanding of the product and its features and conditions should be checked orally, using the telephone, in the days after purchase.

This defeats the whole point of an online service as if advisers need to call up, following an online session, this is going to cost advisers more time and money.

This emphasises the point that online sessions need to be clearer than ever, with an opportunity for clients to ask questions.

The FCA is currently consulting on automated advice and, I really hope, this roundtable is not an indicator of how it perceives automated advice or any online advice to work.

How is this TCF?

Earlier this week, the Financial Conduct Authority launched a discussion paper on the fairness of changes to mortgage contracts.

The FCA said it is looking at whether borrowers’ reasonable expectations are being met or whether lenders are unfairly changing mortgage conditions to bolster their own profits.

All well and good so far...until the FCA says lenders can change their mortgage contracts.

The discussion paper says: “Lenders can change their regulated mortgage contracts after the point of sale without treating their customers unfairly.

“However, there can be fairness issues if, for example, the lender misled the consumer about the likely operation of a mortgage during its term.”

Come again? So a lender can treat customers fairly by changing their mortgages contacts after they have signed on the dotted line? I do not see how this is fair at all and it is concerning that the regulator thinks it is.

An FTAdviser reader said: “The FCA even seemed to be starting to use common sense with the very few advisers remaining, but to state British law of contract can be changed without reference to the courts or Parliament seems either a step too far or a step of unbelievable ignorance.”

Another reader said that lenders “are acting rather aggressively in the current record low interest rate environment”.

Indeed, data from Mortgage Brain revealed mortgage rates are on their way up.

As an example, the lowest rate five-year tracker with a 60 per cent LTV has increased 13 per cent during June and now stands at 3.39 per cent.

Lenders are pricing in a prospective interest rate increase and, if the FCA says it is fine to change contracts, it seems consumers are the ones losing out in this double-whammy.

Lots of annual reports

Three bodies published their annual reports this week.

The Financial Services Compensation Scheme’s annual report, published on 8 July, revealed the scheme has concerns about a growing number of claims for adviser to transfer from an occupational pension into a self invested personal pension.

This echoes the FCA’s warning, back in April, that advice to transfer assets into esoteric investments wrapped within Sipps is to come under a greater level of scrutiny.

Sipps seem to be used as a tool by people and unscrupulous advisers to get people access to esoteric investments, which is not right.

Last year, Adam Wrench of London & Colonial, told me that the traditional Sipp market has “got lost” and now mirrors personal pensions.

If people want to transfer into esoteric assets, they should be able to - it is not banned for retail customers like Ucits are, but the problem is that there is no ‘caveat emptor’ now, and because of this advisers are thrown on the coals time and time again.

FTAdviser revealed this week that the Financial Ombudsman Service found against an adviser who a couple claim gave them unsuitable advice to switch their existing pensions to a Sipp in order to buy a Harlequin property in St Lucia.

No doubt the three-page decision is lacking the detail that is needed to allow readers to make their own decision on the case but the decision said the adviser firm told the ombudsman that the couple had previously bought a Harlequin property, which he did not know about.

If he had, the firm’s decision to give advice “would have been entirely different”, the decision said.

Surely that is non-disclosure by the client.

How can an adviser make an informed decision on investments when he is not aware of the full facts?

Yesterday (10 July), the Money Advice Service published its annual report, which revealed it spent £14.9m on “consumer engagement and corporate communication activity” including consumer campaigns, public relations, stakeholder engagement and internal communication.

I bet advisers wished they had that kind of budget to spend on “consumer engagement”, maybe then there would be less of an advice gap.

The FCA also published its annual report yesterday which revealed, among other things, that the regulator spent £3.3m monitoring the RDR in the 12 months to the end of March.

In the previous financial year it spent £2.4m, meaning the regulator has spent at least £5.7m on the RDR. Has it been worth it?