Several common themes again made headlines this week, with the growing dissent over the lack of a long-stop, debates over adviser charging models in the post-Retail Distribution Review world, and the thorny issue of how to tackle pension liberation once again fell under the spotlight.
One recalcitrant IFA has been praised by readers in FTAdviser’s comment boards for standing up to the regulator by refusing to amend his client agreements, which reference a statutory long-stop under the Limitation Act 1980.
The Financial Conduct Authority has finally told Financial Escape’s Phil Castle he must remove the clause, which he has included in client contracts for five years, four years after it refused to approve agreements and thus prompted the firm to resign from a Trading Standards scheme.
Under the Financial Services and Markets Act 2000 and Consumer Credit Act 1993, complaints to the Fos are not subject to the same time-barring as court actions. The FCA has thus argued the clause is “misleading” - and it is probably technically correct.
Mr Castle has argued in a letter to the regulator - and during a fiery recorded telephone conversation - that it applies in particular instances such as unregulated tax advice or where the redress sought is above the maximum Fos threshold of £150,000.
Whether or not the FCA stands by its stance, advisers have made their feelings clear. Comments included a number stating that the lack of a long-stop for advice is “an injustice under English law”, while another referred to advisers as being treated like ‘sub-humans’.
At least advisers aren’t alone. Tenet recently added its weight behind the battle by launching an e-petition, which has received close to 4,000 signatures.
In a video interview with FTAdviser, the firm’s group regulatory director said the battle was important because the cost of being an adviser, not least increasing PI premiums due to the increasing breadth of advice under the RDR and the endless liability for advice given, “only seems to be going up”.
Many advisers have previously commented that the long-stop is “even more relevant” for network members and thus Tenet’s involvement is one of self-interest, but I suspect support for the campaign is wider than simply network and national advisers.
We need the regulator or high-ranking MPs to get behind the cause for it to really go anywhere, but they don’t seem very keen.
Adviser charging has been rarely out of the headlines since the move to the Retail Distribution Review eliminated commission and brought in explicit adviser charging. This week FTAdviser’s blog on innovation in adviser charging garnered some debate.
It referred to a model being offered by one adviser based on ‘stacked percentages’ - initial fees that take into account the overall sums an individual has invested with an adviser - and asked if this concept and other new ideas like it are the beginning of new ideas coming through.
One commentator stated that he always charges an hourly rate “irrespective of the type of investment business”. In my view, someone with an Isa is unlikely to pay £150 an hour for such advice - indeed it is precisely for this reason that many have said hourly fees simply lower-value clients.