When a client cancels an ongoing service, Gill Davidson, group regulatory director of Tenet, says advisers must inform respective product and service providers (platforms etc) immediately where the adviser charge is facilitated by them.
If an adviser charge is subsequently paid in error, Ms Davidson says it must be returned to the client at the earliest possible opportunity.
She says: “Refunds may also be due where a service is not provided but has been paid for, for example where a client agrees to pay for an ongoing service but fails to deliver their proposition.”
If you receive trail commission for an investment, and it is on top of the charge you already make for an ongoing review service, then Keith Richards, chief executive of the Personal Finance Society, says you should reimburse this to the client or use it to offset other client charges.
Likewise, Mr Richards says if you have agreed a specific project fee with a client and it turns out that the project was less time consuming than originally anticipated then the client should benefit from a lower overall project fee.
But Linda Smith, senior technical adviser of the Association of Professional Financial Advisers (Apfa), says it is for the firm to decide whether or not refunds will be paid to clients.
Ms Smith says the firm’s position should be made clear in the disclosure information given to clients.
Ultimately if the adviser has done the work as agreed for the price agreed Ms Smith says they should not have to shoulder the cost if a client changes his/her mind during a cancellation period.
