OpinionSep 19 2014

Advisers must stand up and say ‘no’... to providers

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Advisers are finally beginning to take a stand against providers whose service is not up to scratch, by billing them for time wasted.

A second adviser, that we know of, has now billed a provider to cover time wasted chasing up an error.

This week Scottish Provident confirmed to FTAdviser that it has made a payout to an adviser who complained that the insurer had allegedly ignored a deed of assignment drawn up by a lawyer and thus failed to place a policy into trust.

Last week, FTAdviser revealed that Stuart Read, director at Sabre Financial Planning, is in dispute Sipp provider Hornbuckle to the small claims court in an attempt to recover outstanding redress from an invoice it sent it for time wasted due to poor service.

That case might even go to court if the firm fails to reconsider, if Mr Read follows through on threats.

As a journalist, I hear many tales of providers’ poor service (and a few of good service, but these are few and far between), so it is interesting to report that advisers have had enough. If hours are spent chasing them for their errors, advisers are well within their rights to bill them for time wasted.

Why should an adviser lose money or be forced to work unsociable hours to catch up on what they should be spending time on because a provider cannot do what they are paid to do?

I expect this is the tip of the iceberg and as advisers hear of peers taking on providers, they will feel more confident in telling the bigger boys that their service is unacceptable.

Surely, if this becomes a trend, providers will be forced to tighten up their act, which of course, can only benefit the consumer in the long-term.

A very different ‘no’

There has been a lot written on Scotland this week, most of it quite hyperbolic, but now at last the results are in and the talking can stop. Or at least, a new debate can begin.

As predicted, it was a tight vote, with 55 per cent voting to stay in the United Kingdom to 45 per cent in favour of independence. Greater devolution has been promised, and should be delivered not just to Scotland but also other regions including England.

A turnout of 86 per cent for the vote makes it one of the highest in the democratic world for any election or referendum in history, according to first minister Alec Salmond.

This just goes to show that when it is an issue close to people’s hearts, they really will get up off the sofa and get involved. I highly doubt next year’s general election will garner a similar turnout.

Bad, bad service

According to FTAdviser sister publication, Financial Adviser, the Pensions Ombudsman has cracked down on pension schemes whose service failures resulted in financial loss for certain pensioners.

Three recent decisions issued by pensions ombudsman Tony King and deputy Jane Irvine, the regulator backed consumers over complaints including “financial loss”, a failure to transfer pension proceeds and issues around early release of deferred pension benefits.

Both the Financial Services Compensation Scheme and the Financial Conduct Authority have previously warned on pension advice, but more relating to transfers to self invested personal pensions.

In fact, last month the compensation scheme warned that there is a “medium risk” of an interim levy during 2014/2015 in the life and pensions category, due to the risk of increased compensation claims from complaints regarding Sipps.

If bad service continues, it is not only the levy that will go up, but the amount of redress that solvent firms end up paying out to consumers. They need to be at the heart of a business proposition, but these continuing complaints show this is yet to be achieved.

And almost two years later...

...it appears a post-RDR advice market is finally beginning to take shape. FTAdviser reported this week that a greater number of larger advice businesses are being driven by consolidation among more established firms and buyouts by providers, while a new stream of smaller advice outlets are being set up by former bank advisers.

Many that FTAdviser spoke to predicted that consolidation will continue as a number of firms seek scale to cope with rising costs and regulatory burden, while others have found evidence that registered individual numbers are steady due to former employees of axed bank advice arms setting up their own businesses.

Most commentators also agreed that the RDR was a trigger for this as smaller businesses struggle with tighter margins.

Now all the new Sipp regulations have been published will the same happen in the Sipp market? After all providers will have their margins squeezed more than ever, due to the new cap ad requirements, yet they have not (so far) passed costs onto consumers.

We have seen far more consolidation in the Sipp market in the last few weeks, as predicted, and I expect in time we will see a far more tighter provider market. But it will be disappointing if it takes two years to develop.