Regulator must change jaundiced view on client poaching


Desperate times call for desperate measures, and the time is fast approaching when the main players in retail finance will fight tooth and nail for ownership of ordinary household investors.

In principle and by law, retail clients are ‘owned’ by financial advisers, they are the professionals responsible under RDR, for advising their clients on financial planning and, if retained, managing those investments.

Where advisers outsource aspects of that management, be it to life offices, platforms or fund managers, they still retain ownership of the client in the eyes of the regulator, and rightly so.

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However, inevitably in outsourcing the details of the client must be shared with providers of the products and services and there is a moral duty – it should be reinforced in law through the regulator – that all communication with those clients should be through the intermediary, unless the client has expressly given other instructions.

It is unprofessional and outright dishonest for senior staff at leading providers to make contact on spurious grounds with clients then, in the process of a bogus factfinding conversation to offer a new product or service.

At present there is little the financial adviser can do apart from scream for help; like so many other things in retail finance, the City regulator either stands by and pretends to be the three monkeys and, if called upon to act, then bows to the power of the big cheque book.

We already know that Whitehall has little respect for financial advisers and Canary Wharf shows every inclination to go along with that view.

But, as we have said before, it is a distorted and jaundiced view that should long have been despatched to wherever it came from.

Financial advisers are in the main decent and law-abiding people who set high standards on their professionalism.

Few other organised groups of workers would have reacted with the speed and fortitude of the financial advisory sector following Sir Callum McCarthy’s Gleneagles speech, which poured scorn on the intermediary business model, comparing them to criminals ship-bound to Australia.

Yet, years before the introduction of RDR, financial advisers reorganised their businesses, improved their professional qualifications and introduced in the main new forms of remuneration, without even a nod from the regulator or senior civil servants.