I was reminded of the lyric after FTAdviser published two stories relating to the mounting concern over life office Aegon’s client contact policies.
In the first case, the insurer’s complaints department defended its decision to end the adviser’s agency relationship with a client holding two Aegon investment bonds without consulting the intermediary, stating it has no contractual obligation to make contact prior to doing so - despite the insurer saying seven weeks ago that it had revised its policy in this area.
In another case, an adviser raised concern over 12-week annuity letters sent by the firm which give primacy to a page one push for its advisory subsidiary Origen’s service and contain no reference whatsoever to the existing advisory relationship. On this occasion the complaints department again said the firm’s policy had changed, but a spokesperson seemed to confirm this would only mean the information about seeking advice generally is being bumped up the letter order.
This is by far not the first time we’ve seen this in relation to a number of other providers, in most cases also life offices. Indeed just last week we published a story that raised concern over a change to Scottish Widows’ terms of business which one adviser said reveals it sees adviser client books as “their customers”.
It’s easy to see why advisers are worried, but is their concern justified?
Aegon, for example, states that it has a requirement to ensure ongoing service is still being provided. Presumably, they might add, it is not economically viable to do so by other than the clumsy means it has thus far, such as checking how many times you’ve accessed its website.
I’d say that just because there might seem to be a hint of paranoia, that does not mean they are not, in fact, after your clients.
Clients move, liabilities do not
Another key theme that re-emerged was that of the disparity in transference treatment between the liabilities of failed advisers and the client books.
This week adviser firm 20Twenty Independent, which specialised in advice in relation to controversial film schemes and had previous been on the wrong end of a major ombudsman ruling, was confirmed as having entered liquidation. FTAdviser revealed, however, that many of its staff and clients have moved to an associated firm, Totus Capital.
It’s not the same as ‘phoenixing’ as the latter firm has been in existence for some time, but it shares some of the characteristics.
In her column for FTAdviser sister title Financial Adviser this week, Gill Cardy, chief executive of IFA Centre, said phoenixing will continue all the time we have laws that allow it and a lack of protection for advisers due to the lack of a long-stop.
I’d be interested to hear your views.
Defining ‘defined ambition’
A long-awaited paper published yesterday (7 November) finally revealed the government’s proposals to create a new form of salary-related pension - so-called ‘defined ambition’ schemes - by offering greater flexibility over how payments accrue and bringing in limited guarantees for defined contribution schemes.
Among the plans was the headline-grabbing option of removing the requirement to index-link final payouts, meaning that savers are exposed to inflation risk. Some were even more ambitious, for example an idea to offer a form of insurance that protects DC scheme contributions and investment returns, though even the DWP admitted this latter probably wouldn’t be a flier.
It’s pleasing to see the government continuing to seek reforms - and that some of those reforms are with the aim of stopping people falling back on the state.
This is desparately needed as the pension liability continues to grow: data released by the Office for National Statistics this week showed that the number of pensioners is going to rise at three times the rate of adults of working age over the next 25 years.
Bad news keeps coming
It was another week for major scandals, too.
In the most widely covered of the stories relating to ongoing investment imbroglios, it was revealed that HSBC has set aside £93m to cover redress over investment advice failings identified by the regulator as part of a mystery shopping exercise last year.
Six banks were included in the study and 25 per cent of all advice was deemed unsuitable, or at least potentially so. This will not be the end we hear of this.
And speaking of things we do not hear the end of, this week embattered property firm Harlequin was back in the news after a former director at its accountant backed down over his claims on a website that the firm is a fraud and a Ponzi scheme.
Elsewhere, Arch Cru was again in the headlines as a High Court judge gave the go ahead to a £16m legal claim against the funds’ former authorised corporate director Capita Financial Managers. According to a lawyer acting on behalf of the 550 investors behind the claim, if they are successful advisers facing claims may even be provided with a useful defence of their own.
