Sesame’s seedy tactics taint the whole industry

That clearly does not happen, and the reputational damage to the whole industry every time one firm transgresses is incalculable.

Over the past month we have seen banks putting aside more money for PPI mis-selling. Old news it may be, but every announcement is another reminder of why they are treated with mistrust.

But more damaging for financial advisers have been the events at Sesame, which was fined by the regulator for the fourth time.

The £1.6m fine for setting up a “pay-to-play-scheme” saw the firm “promote its own commercial interests over the interests of clients.”

Firms have been told time and time again that they must put their customers at the heart of their business.

The retail distribution review was supposed to remove the taint of commission-bias and ensure that advice was separated from the consideration of commercial interests.

Sesame, as the largest network of advisers, could have taken a lead in the brave new RDR world and shown consumers how advice could be delivered cleanly and fairly.

Sesame could have taken a lead and shown the consumers how advice could be delivered cleanly and fairly

Instead it chose to set up commercial deals which effectively meant inclusion on panels was influenced by how much providers were willing to pay Sesame for additional services.

In so doing Sesame brought the taint of bias into advice. As the FCA said: “Sesame failed to manage the conflict between its commercial interests and those of its clients.”

This is the second large fine for the network in the space of 17 months – hardly a great advert for the financial advice sector.

When something like this happens it does not only affect the firm that is fined, but it also casts a pall over the whole sector.

People reading about it inevitably ask the question: can I trust my own financial adviser?

It is similar to the problems in my own industry. Some journalists on two papers hack phones and bribe officials. But in the eyes of the public we are all tainted.

There is a responsibility on each and every person who works in the financial industry not only to act in the interests of their firm and their client, but also to consider how every action they take could reflect on the industry as a whole.

Unfortunately, it is a responsibility that many have yet to embrace.

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One-fifth face flat-rate pensions shock

Nearly a fifth of people due to retire after 6 April 2016 believe they will not qualify for the £155 a week flat-rate pension, according to a survey published by Prudential.

That suggests that plenty more – as well as the pension specialists at the Pru – have a rude awakening. The results may show 18 per cent of those interviewed believe they will miss out, but the true figure is 68 per cent in year one.

And 20 years after the new scheme is introduced, one in five will still fail to qualify for the full weekly payout.

Those figures were revealed by pensions minister Steve Webb in the summer.

The new flat-rate state pension is not more generous than the old – nor was it ever meant to be.

It is simply redistributing existing state pension money.

The second state pension will be less generous, and fewer will be eligible for means-tested benefits.

It is a scheme that is meant to provide a decent basic level of income and to make sure those who save themselves are rewarded for it.

But to qualify for the headline rate of £155 a week individuals must have made full national insurance contributions for 35 years.

And that means plenty of people who have been contracted out will get rather less than the headline rate.

In fact some will receive just the basic state pension – currently £113.10 a week.

After April 2016 everyone will contribute towards the flat-rate pension so the anomaly will gradually disappear – but not in the working lives of most of us.

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All in it together?

Thanks to Ros Altmann for reminding us that while we plebs must make do with defined contribution pensions, the elite at the Bank of England enjoy astonishingly generous schemes.

Members do not have to contribute, but the Bank puts in more than 50 per cent of pensionable earnings. Contributions were almost £75m in 2014 as it sought to plug a deficit.

There are just over 1,000 staff in the final-salary scheme, with 12,500 members including pensioners and deferred pensioners. Then there are another 1,400 in the career average scheme. Both are linked to the retail price index.

Never mind. This insulation at least allows them to make decisions coldly, without worrying too much about those who must survive on real pensions.

Tony Hazell writes for the Daily Mail’s Money Mail section